Vodacom is still growing strongly into Africa’s financial and digital services sector
VODACOM Group grew its revenue 1.5% to R36.2billion in its first quarter to June 30, but revenue growth of its financial service offerings across Africa was much stronger.
Group service revenue increased 10% on a normalised basis, above a medium-term target. South Africa service revenue grew 1.8%, supported by an improved prepaid performance, the group said in a trading update yesterday.
CEO Shameel Joosub said they celebrated Vodacom’s 30th birthday in the first quarter, having signed up its first customer on June 1, 1994, when the network was switched on in South Africa.
“Three decades later, the group serves more than 200 million customers across DRC, Ethiopia, Egypt, Kenya, Lesotho, Mozambique, South Africa and Tanzania, a footprint that covers more than half a billion people and is almost 12 times greater than when we launched.”
Egypt grew service revenue 43.7% in local currency, with Egypt financial services revenue up 87%. International service revenue increased 2.3%, supported by excellent growth in Tanzania.
Group financial services revenue increased 8.7% to R3.3bn. Some $400.2bn was transacted through the mobile money platforms, including Safaricom, over the past 12 months.
Joosub said the economic environment was challenging, but their strategy to diversify revenue growth by product and geography was bearing fruit. “This is evidenced by the 10% growth in normalised service revenue to R29bn – exceeding our medium-term target – and the 16.8% increase in normalised group financial services revenue to R3.3bn.”
Service revenue from the group’s “beyond mobile services” contributed R6bn, which equated to 20.8% of the group total. Joosub said the beyond mobile services revenue was well on track to reach a target contribution of 25% to 30% over the medium term.
Financial services was the largest component of beyond mobile services.
“We now process $400bn in mobile wallet transaction value annually… I was particularly pleased with the growth of M-Pesa services that aim to deepen financial inclusion, such as loans, savings, international money transfer and merchant services,” said Joosub.
Group financial services revenue of R3.3bn was also supported by rapid local currency growth of 87% in Egypt, and strong growth in South Africa within the insurance and Airtime Advance segments. The apps VodaPay, Vodafone Cash and M-Pesa were furthering the group financial services ambitions, “as they integrate our own products and services with the best offerings from our partners,” he said.
Across the geographic segments, Egypt remained a star performer having grown service revenue at 43.7% in local currency. South Africa’s results were boosted by better prepaid performance and price adjustments. Supported by additional data allocations and good growth in smart devices, data traffic grew 31.3%, while beyond mobile services rose 6.3%, contributing R2.6bn to South Africa’s service revenue of R15.3bn.
Some R1.9bn was invested in the quarter, and “we expect to invest around R11.5bn of capital expenditure in the current financial year”.
Investments into new spectrum in DRC, Mozambique and Tanzania and a 19.7% rise in 4G sites across the portfolio were evident in the 5.7% normalised growth in service revenue to R7.4bn.
The proposed acquisition of a joint control stake in South African fibre operator Maziv was currently before the Competition Tribunal for consideration.