Going ‘beyond mobile’ pays off for Vodacom

Service revenue from the Vodacom Group’s “beyond mobile” services made for a massive R6-billion in revenue for the last quarter, according to the company’s latest quarterly results. The segment, previously categorised as “new services”, includes digital and financial super apps like VodaPay, Vodafone Cash and M-Pesa, and fixed and Internet of Things (IoT) services.

The mobile operator is targeting a contribution to total revenue from these services of 25-30% over the medium-term. At R6-billion, it already makes up 20.8% of the group total. It includes mobile money services, which Vodacom says has seen US$400.2-billion in transactions over the last twelve months.

“Across our geographic segments, Egypt remains a star performer having grown service revenue at 43.7% in local currency, well above the rate of inflation,” said group CEO Shameel Joosub in announcing results for the quarter from March to June 2024. “Commercial momentum was strong in Egypt, with a 47.9% increase in financial services customers to 8.7-million and a 34.7% improvement in data traffic. With service revenue of R6.4-billion, Egypt now accounts for 21.9% of the Group’s total, ending the quarter with 47.4-million customers, up 6.1%.”

During the quarter, the company celebrated Vodacom’s 30th birthday, having signed its first customer on 1 June 1994 when it switched on its network in South Africa. 

“Three decades later, the Vodacom 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.

“While the economic environment in recent years has been challenging, our strategy to diversify our revenue growth by product and geography is bearing fruit. This is evidenced by the 10% growth in normalised group service revenue to R29-billion in the first quarter – exceeding our medium-term target – as well as the 16.8% increase in normalised group financial services revenue to R3.3-billion.”

Financial services, he said, were a clear strategic priority for the group and remained the largest component of beyond mobile services.

“We now process US$400-billion in mobile wallet transaction value annually, highlighting the scale of this business. 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. 

“Group financial services revenue of R3.3-billion was also supported by rapid local currency growth of 87% in Egypt, and strong growth in South Africa within our insurance and Airtime Advance segments. Our super-apps – VodaPay, Vodafone Cash and M-Pesa – are key to furthering our financial services ambitions as they integrate our own products and services with the best offerings from our partners.”

South Africa delivered a steady 1.8% increase in service revenue, while Tanzania and DRC were the significant contributors to the 5.7% growth in international business.

“South Africa’s results were boosted by improved prepaid performance and price adjustments that delivered greater value to customers. Supported by additional data allocations and good growth in smart devices, data traffic grew 31.3%while beyond mobile services increased by 6.3%, contributing R2.6-billion to South Africa’s service revenue of R15.3-billion. “

Joosub said Vodacom had invested R1.9-billion in the quarter, and expected to invest around R11.5-billion of capital expenditure in the current financial year to further enhance customer experience.

“Across our International business our investments into new spectrum in DRC, Mozambique and Tanzania and a 19.7% increase in 4G sites across the portfolio are evident in the 5.7% normalised growth in service revenue to R7.4-billion. DRC delivered high single-digit US dollar growth and Tanzania continued to deliver excellent local currency results, while normalised M-Pesa and data revenue growth was strong at 10.9% and 15.5%, respectively. Our International business customer base reached 55-million, up 6.4%, supported by strong commercial execution and a further R1.1-billion network investment in the quarter. Data traffic grew by 29.6% while smartphone users were up 0.5-million in the quarter to reach 16.4-million as we look to accelerate smartphone penetration with innovative financing options, including a new daily repayment model.”