Vodacom's Growth Reinvestment
Vodacom Reduces Dividend Payout to Fuel Africa Expansion, Boost Safaricom Investment
Anonymous
Key Points
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In the quarter ended 30 June, Vodacom reported group revenue of R42.4 billion (up 5.9%) and service revenue of R34.3 billion (up 6.3%), with prepaid revenue returning to growth.
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Egypt remains a major growth engine, with local-currency service revenue up 32.8% and financial services revenue in Egypt rising by 73%.
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Vodacom highlighted scale in its fintech/ wallet business, noting annual mobile wallet transaction value of about $547.9 billion (including Safaricom) and 19.1% growth.
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Shameel Joosub signaled that, despite the lower dividend payout ratio, the group still intends to grow the dividend per share for FY2027, supported by its growth trajectory and current conditions.
Vodacom has cut its dividend payout ratio from 75% to at least 65% of headline earnings, redirecting cash toward growth after buying a bigger stake in Safaricom. The telecom giant raised its Safaricom holding from 35% to 55%, deepening its bet on African expansion and mobile money.
The group reported group revenue of R42.4 billion for the quarter ended 30 June, up 5.9%. Service revenue rose 6.3% to R34.3 billion. Despite the lower payout ratio, CEO Shameel Joosub said the group still plans to grow its dividend per share for FY2027.
Dividend Cut Funds a Bigger African Footprint
Vodacom's board overhauled its capital plan. The new framework balances four goals: building network infrastructure, growing digital and financial services, cutting debt, and returning cash to shareholders. The payout floor drops to 65% from 75%, freeing up more earnings for reinvestment.
Joosub was clear that this is not a retreat from shareholder returns. He pointed to the group's growth path as the reason dividends per share can still rise in FY2027, even with a lower payout ratio. Bigger profits, in other words, can offset a smaller slice of the pie.
Safaricom Deal Supercharges Fintech Revenue
Buying a majority stake in Safaricom transformed Vodacom's financial profile. Financial services now make up more than 22% of group service revenue, up from about 13% before the deal. The group's mobile wallet business processed around $547.9 billion in annual transaction value, growing at 19.1%.
The Safaricom acquisition also pulls M-Pesa — East Africa's dominant mobile money platform — deeper into Vodacom's orbit. That gives the group a powerful tool to push financial inclusion across markets where millions of people still lack bank accounts.
Egypt Drives Explosive Growth in Local Currency
Egypt is Vodacom's fastest-growing market right now. Local-currency service revenue jumped 32.8% in the quarter. Financial services revenue in Egypt surged 73%. While currency swings can dent rand-reported numbers, the underlying demand is strong.
Prepaid revenue also returned to growth across the group, a positive sign after a period of pressure on lower-income customers. Egypt's momentum, combined with prepaid recovery, gives Vodacom two tailwinds heading into the second half of the year.
Vodacom Lifts Long-Term Targets to R300 Billion
Vodacom raised its Vision 2030 revenue target from over R200 billion to over R300 billion. It also upgraded its medium-term growth targets, with EBITDA and operating free cash flow both now expected to grow in the early teens percentage range. EBITDA measures profit before interest, tax, and other costs.
The higher targets reflect confidence in the Safaricom deal and the group's fintech push. Vodacom is betting that Africa's growing middle class, rising smartphone use, and demand for digital payments will keep fueling growth well past 2027.
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