Celebrating Vodacom’s 30th birthday, connecting 206-million customers and providing financial services to 83-million customers are some of the significant milestones in the Group’s history that I am particularly proud of. These were achieved in the first half of the current financial year, a period that was characterised by significant currency headwinds on the one hand and a resilient operational response on the other to ensure that we continue to deliver on our medium-term financial targets. While our bottom line was impacted by various one-offs, I am confident that we are poised for a stronger second half performance.
On 1 June 1994 we signed up our very first customer when the first of our networks in South Africa went live. Fast forward to 2024, we now serve 205.6-million customers across a footprint that also includes DRC, Egypt, Ethiopia, Kenya, Lesotho, Mozambique and Tanzania, covering more than half a billion people.
While the industry and the company have had to adapt to evolving regulatory pressures and customer needs, Vodacom’s purpose was unchanged for the past three decades, which is to make sure that everyone is connected.
At the same time as delivering great value to customers, we have remained resolute in delivering societal value through a wide range of initiatives that change the lives of people. Our m-mama programme is a prime example of what can be achieved when innovative technology is developed and deployed to address societal challenges. Thus far, m-mama has saved many lives by facilitating an emergency transport service for expectant mothers in Tanzania and Lesotho.
Shameel Joosub CEO Vodacom Group
Our “System of Advantage” focuses on ensuring that we have the right strategy and people to drive the sustainability of the company well into the future. At the core of our offering is connectivity, where we remain market leaders and are driving digital inclusion. As pioneers of mobile financial services, which now contributes significantly to Africa’s financial inclusion, it remains our ambition to grow and diversify beyond mobile revenues to exceed 25% of Group service revenue in the medium-term.
Our latest interim results showcases our product and geographic diversification with Group service revenue increasing by 9.9% on a normalised basis, at the top end of our medium-term target. On a reported basis Group service revenue declined 1.2% to R58.6-billion, due to currency headwinds. Group EBITDA grew by 8.5% on a normalised basis and we remain on track to invest 13% to 14.5% of revenue into capital expenditure, in line with our medium-term targets.
Beyond mobile, which includes digital and financial services, fixed and IoT, contributed 21.1% to Group service revenue, underpinned by mobile financial services such as payments, savings, loans and merchant offerings. Our mobile money platforms, including Safaricom, processed US$421.3-billion of transaction value over the last twelve months, cementing our leadership as an African FinTech company.
In the past five years alone, we have invested almost R80.0-billion across our markets, with a concerted effort to accelerate rural coverage. This has resulted in Vodacom securing its network leadership in most markets where we operate and to an additional 10.9-million customers joining our network over the last twelve months.
From a financial performance perspective, I am particularly pleased with the manner in which our Egyptian business navigated its way through a material currency devaluation to produce R13.0-billion in service revenue, underpinned by a stellar 44.1% growth in local currency. This was supported by strong customer engagement in connectivity and excellent growth in Vodafone Cash, and contributed to a 5.9% increase in customers to 48.3-million in Egypt.
In South Africa, we now service 49.2-million customers, an increase of 4.2%. Driven primarily by beyond mobile services, the consumer segment and prepaid mobile data, service revenue in South Africa grew 1.3% to R31.1-billion despite pressure in the wholesale segment. Beyond mobile services increased 8.1%, contributing R5.5-billion or 17.7% of service revenue. By containing costs below inflation and delivering revenue growth, South Africa grew EBITDA by 2.3% while operating profit increased 2.4% on the back of a moderated investment into energy resilience given the recent stability of the national electricity grid.
Excellent service revenue growth in Tanzania of 19.1%, and 9.0% growth in DRC, were the drivers of our commercial performance in our International business. On a normalised basis our International business grew service revenue at 6.2%*, with the customer base up 4.5% to 56.1-million. While this helped offset one-off costs in DRC and the impact of repricing in Mozambique, EBITDA from this portfolio declined 20.0%. This was disappointing given the commercial momentum in the segment, however we do expect an improved EBITDA performance from this segment in the second half.
Safaricom delivered an excellent result in Kenya, while our Ethiopian greenfield operation faced a material currency impact in the period. In Kenya, service revenue growth of 12.9% was supported by strong adoption of our 4G services and sustained M-Pesa growth. M-Pesa’s 16.6% growth in revenue was supported by business payments. In Ethiopia, we reached 6.1-million customers, up 47.1%, reflecting strong commercial momentum. As an associate of the Group, Safaricom’s contribution of R1.3 billion to operating profit was impacted by the currency reforms in Ethiopia. In contrast, Safaricom’s underlying net profit result demonstrated strong growth.
Headline earnings per share declined 19.4% to 353 cents per share (cps). This was largely attributable to the currency depreciation in Ethiopia (53cps) and one-off costs in our International business. Given the expected phasing impact of the currency depreciation in Ethiopia on headline earnings for the full financial year, the Board declared an interim dividend of 285cps equating to an 86% pay-out. The Group’s dividend policy remains unchanged and based on a pay-out of at least 75% of headline earnings.
From a mergers and acquisitions perspective, our proposed acquisition of a 30 to 40 percent stake in South African fibre operator Maziv was prohibited by the Competition Tribunal in October 2024. The Transaction was designed to assist Maziv in growing its fibre footprint into lower income areas and would have been highly beneficial for South Africa. We await the Competition Tribunal’s detailed reasons for prohibiting the Transaction, before considering all options available to Vodacom, which may include an appeal in the Competition Appeal Court.
Looking ahead and despite the pressures associated with this economic cycle, we will continue to invest in and execute on our strategy. It is pleasing that our markets continue to deliver strong operational momentum, despite the material currency devaluations in Egypt and Ethiopia. While we remain mindful of an evolving macro-economic environment across our footprint, including foreign exchange rate risk, I believe that the Group is well positioned to capitalise on opportunities once the global economy shifts from its current cautious optimism to sustainable growth. This means that we will relentlessly continue to pursue our purpose of connecting people for a better future.