Vodacom’s African financial services operations growing well

The Vodacom shop at N1 City in Goodwood. Picture: Ian Landsberg (ANA)

The Vodacom shop at N1 City in Goodwood. Picture: Ian Landsberg (ANA)

Published Jul 22, 2022


Vodacom Group increased its customer contract base by 5.1 percent to 6.5 million in the quarter to June 30, boosted by a strong performance in the financial services operations as cellphone banking continues to grow in Africa.

Group revenue increased 5.2 percent to R26.1 billion – group service revenue was up 5.2, supported by growth in data revenue and new services such as IoT.

For contrast, MTN South Africa, Vodacom’s bigger rival in this country, saw a 7.4 percent uplift in contract subscribers to 7.5 million in the year to March 31.

Vodacom’s South Africa service revenue grew 3 percent with an improved performance in consumer contracts. International service revenue increased 10.4 percent, supported by data revenue growth and a weaker rand.

Financial services revenue increased 9.3 percent to R2.1bn.The growth rate was dampened by mobile money levies in Tanzania, but adjusted for this impact, the revenue increase would have been 19.7 percent, said Vodacom group CEO Shameel Joosub.

The financial services segment is driven mainly by the mobile money platform M-Pesa, which is Africa’s largest service of its kind by transaction value.

“Combined with Safaricom, our M-Pesa platform processed $340bn over the last 12 months, up 20.2 percent. Looking ahead, a further 43 percent reduction to mobile money levies in Tanzania from July 2022 bodes well for M-Pesa’s contribution to financial inclusion in the country,” said Joosub.

He said Vodacom produced a resilient first quarter performance despite turmoil in financial markets and uncertainty about the recovery of the global economy.

“Inflation continues to accelerate in most markets where we operate, which means the cost of living has climbed.”

Vodacom was accelerating the delivery of innovative products to provide greater value to customers under increasing financial strain, he said.

Efforts to lower the cost to communicate for poorer communities were also being ramped up through initiatives such as personalised nano pricing on the “Just4You” platform and the deployment of high-demand spectrum purchased through Icasa’s auction process earlier this year, he said.

“During the past quarter we made good progress on optimising our assets. For instance, we are establishing a separate legal entity for our South African ‘TowerCo’ that will be 100 percent owned by Vodacom Group,” said Joosub.

On the transformation agenda, the group spent R41bn on procurement from suppliers with B-BBEE credentials on level 4 or better in the past year, including R18bn in procuring services from greater than 30 percent black woman-owned suppliers.

To halve the group’s environmental impact by 2025, Vodacom South Africa intended to increasingly diversify its energy mix and purchase electricity from renewable sources wherever possible.

The adoption rate of the VodaPay super-app in South Africa remained encouraging with 2.8 million downloads and 1.9 million registered users by quarter end.

“Given VodaPay is a precursor to M-Pesa’s evolution and further strengthens our fintech position across our footprint, we remain confident about the growth outlook of financial services,” said Joosub.

The recent acquisition of a 55 percent stake in Vodafone Egypt of around R41bn was expected to soon receive Egyptian regulatory approval.

The regulatory approval process for the acquisition of a 30 percent stake in CIVH’s fibre assets was also making progress and was expected to conclude in the current financial year.

Revenue from new services, which include digital and financial, fixed and IoT, remained a key growth engine and in the quarter, these new services amounted to R3.8bn, up by 10.7 percent.

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