Vodacom’s acquisition of a controlling stake in Safaricom has marked a turning point for the telecommunications group, transforming it into a more diversified African business with greater exposure to high-growth markets and financial services.
The transaction took effect on June 30 and has increased Vodacom’s stake in Safaricom from 35% to 55%, giving it control of East Africa’s largest telecommunications operator and significantly reducing its reliance on South Africa for growth.
Shameel Joosub, group chief executive, said the acquisition represented a great milestone in the Vodacom Vision 2030 strategy.
“We are now entering a new phase of growth, supported by a more balanced portfolio, broader earnings drivers and increased exposure to some of Africa’s most attractive opportunities in connectivity, digital services and financial inclusion,” said Joosub.
Vision 2030 revenue ambition
The acquisition has prompted Vodacom to raise its medium-term growth targets for EBITDA and operating free cash flow from double-digit growth to the early teens. It also lifted its Vision 2030 revenue ambition from more than R200-billion to more than R300-billion.
Vodacom said the deal significantly expands its financial services business, with fintech now expected to contribute more than 22% of group service revenue, up from 13% before the acquisition.
The group processed $547-billion in mobile money transactions across its platforms, including Safaricom, over the past 12 months, underscoring the growing importance of digital financial services to its business.
The transaction also shifts Vodacom’s earnings mix towards faster-growing African markets. Alongside South Africa, the group now expects meaningful earnings contributions from Safaricom, Egypt and its international operations.
This is expected to give it a more balanced portfolio and greater opportunities to invest in network infrastructure, digital services and financial inclusion.
Attractive shareholder returns
Joosub said the stronger growth profile had given the board confidence to revise the group’s capital allocation strategy while maintaining attractive shareholder returns.
“Following the completion of milestone transactions, Maziv and Safaricom, Vodacom has shaped its strategy for the future. Our focus now shifts to unlocking the full potential of our portfolio through disciplined execution, innovation and capital allocation,”he said.
As it stands, Vodacom South Africa has recorded muted growth in the first quarter with revenue increasing only 1.6% to R22.9-billion while stronger performance from Egypt and the rest of Africa lifted the telecommunications group’s overall results.
Group revenue increased 5.9% to R42.4-billion in the quarter ended June 30 while group service revenue increased 6.3% to R34.3-billion.
South Africa service revenue increased 2% and Egypt recorded 32.8% in local currency. Joosub said South Africa delivered a stable performance despite a challenging environment.
“Pleasingly, our South Africa prepaid segment returned to growth in the quarter, reflecting the positive impact of the actions we have taken to improve value and simplify propositions.
“Our first-quarter performance highlights the benefits of our diversification strategy, with strong contributions from Egypt and our International business reinforcing the resilience and balance of our portfolio,” said Joosub.
- Vodacom increased its stake in Safaricom from 35% to 55%, gaining control of East Africa’s largest telecom operator and reducing reliance on South Africa for growth.
- The acquisition advances Vodacom’s Vision 2030 strategy, raising medium-term EBITDA growth targets to early teens and revenue ambitions from over R200 billion to R300 billion.
- Fintech now contributes over 22% of Vodacom’s group service revenue, up from 13%, with $547 billion processed in mobile money transactions across its platforms in the past year.
- The deal diversifies Vodacom’s earnings mix, boosting contributions from faster-growing markets like Egypt and international operations alongside South Africa.
- First-quarter results showed muted growth in South Africa (1.6% revenue increase), but strong overall revenue growth of 5.9%, driven by Egypt’s 32.8% service revenue increase and improved prepaid segments.
Vodacom's acquisition of a controlling stake in Safaricom has marked a turning point for the telecommunications group, transforming it into a more diversified African business with greater exposure to high-growth markets and financial services.
“We are now entering a new phase of growth, supported by a more balanced portfolio, broader earnings drivers and increased exposure to some of Africa's most attractive opportunities in connectivity, digital services and financial inclusion," said Joosub.
Vodacom said the deal significantly expands its financial services business, with fintech now expected to contribute more than 22% of group service revenue, up from 13% before the acquisition.
Joosub said the stronger growth profile had given the board confidence to revise the group's capital allocation strategy while maintaining attractive shareholder returns.
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As it stands, Vodacom
Group revenue increased 5.9% to R42.4-billion in the quarter ended June 30 while group service revenue increased 6.3% to R34.3-billion.
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“Our first-quarter performance highlights the benefits of our diversification strategy, with strong contributions from Egypt and our International business reinforcing the resilience and balance of our portfolio,” said Joosub.
