Vodacom achieves strong growth as financial services customer numbers reach 100 million

Vodacom Group increased group service revenue by 12.7% in the quarter ended December 31, 2023, with normalised growth of 13.6% tracking favourably against medium-term targets.

The telecoms group said in a trading update on Wednesday that group revenue grew 11% to R43.9 billion in the three months.

"During the third quarter, Vodacom Group made significant strategic progress, marked by two milestones that strengthen our long-term growth profile and accelerates inclusive connectivity across our footprint," said the CEO Shameel Joosub.

In December, the acquisition of an additional 20% stake in Safaricom was announced, boosting the presence in the high growth East African markets of Kenya and Ethiopia. In November, the acquisition of a stake in South African fibre business Maziv received final regulatory approval, unlocking an opportunity to accelerate fibre deployment.

During the quarter, South Africa service revenue growth increased 1.4% to R16.42bn, supported by "Beyond Mobile," the group's strategy to diversify beyond traditional telecoms into IoT (Internet of Things), financial services, fixed connectivity and digital platforms.

Egypt grew service revenue by 39% to R9.5bn, with Egypt financial services revenue up a very strong 59.4%. International business service revenue increased by 12.6%, with normalised growth accelerating to 15.4%. Group financial services revenue increased by 24.7% to R4.5bn. Some $500.7bn was transacted through the mobile money platforms, including Safaricom, over the last twelve months.

Joosub said that from a financial performance perspective, the ideal start delivered in the first half to their Vision 2030 ambitions continued into the third quarter. The quarter benefited from sustained growth in Egypt and the International business, including a strong performance in the Democratic Republic of Congo, while South Africa delivered modest, but satisfactory revenue growth against a particularly strong comparative quarter last year.

"Including Safaricom, we passed the 100 million financial services customers mark in the quarter, illustrating our purpose-led impact on people and economies across our markets," said Joosub.

He said the consumer environment in South Africa was challenging, while the comparative period a year was also particularly strong, and the 1.4% service revenue growth was supported by "robust growth" in financial services, fixed connectivity, and IoT.

The contract segment grew 2.6%. Prepaid revenue was under pressure due to a tougher consumer backdrop and promotional pricing. Data traffic surged by 32.3%, supported by investment in network quality and a successful summer campaign.

The international business reported service revenue up 12.6% to R8.8bn. The region benefited from strong commercial execution, network modernisation, and the scaling of advanced digital and financial services.

Data revenue grew by 21.1%, contributing 31.2% of International business service revenue, while M-Pesa revenue accelerated 22.1%, with double-digit expansion across all markets. The customer base increased by 12.5% to 65.7 million, reflecting the success of  financing options and adoption of new products such as communal savings and fuel loans.

Egypt remained a standout performer, with service revenue rising by 39% to R9.5bn, now accounting for 27.5% of group service revenue.This was driven by good commercial momentum, enhancements to integrated connectivity and content packages, and continued traction of Vodafone Cash.

Eqypt's financial services revenue grew by 59.4%, supported by a 28.9% increase in active customers to 13.5 million. Data traffic expanded by 25.1%, with data customers up 8.9% to 33.9 million.

"Looking ahead, we remain focused on delivering our medium-term targets, advancing financial inclusion, and executing with discipline across products and geographies," said Joosub.

Vodacom's share price tracked 1.36% lower on Wednesday morning to R153.56, a price that was 28.9% higher than a year before.

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