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Vodacom edges closer to pan-African tech goal

Vodacom Group CEO Shameel Joosub.
Vodacom Group CEO Shameel Joosub.

Vodacom’s intended acquisition of a 55% stake in Vodafone Egypt, as well as a stake in Community Investment Ventures Holdings’ (CIVH) fibre assets, along with the commercial launch of its consortium in Ethiopia this year, has helped the operator cement what it calls a “watershed year” for its ambition to transition to a pan-African technology company.

This is according to Vodacom Group CEO Shameel Joosub, who commented on the company’s preliminary results for the year ended 31 March 2022.

The results included normalised Group service revenue and Group operating profit growth of 4.6% and 5.4% respectively, which the company said is in line with medium-term targets, free cash flow up 4.6%, full year dividend of 850cps, up 3.0% and declared a final dividend of 430cps.

Vodacom said it added 5.9 million customers, to serve a combined 129.6 million customers across the Group, including Safaricom on a 100% basis, with a 5.0% growth in financial services customers to 60.6-million (including Safaricom).

Acquisition progress

In early January 2022 Vodacom shareholders gave the company’s proposed R41-billion (US$2.738-billion) Vodafone Egypt deal the go-ahead.

As to how far the deal is from being completed, Joosub said “The purchase of a 55% stake in Vodafone Egypt, which has a proven track record of consistently delivering strong revenue growth, is nearing conclusion…”

“Similarly, our proposed acquisition of a strategic stake in Community Investment Ventures Holdings (Proprietary) Limited (CIVH), will assist in narrowing the digital divide by enabling affordable access to connectivity in some of the most vulnerable parts of our society, is before South Africa’s regulators for approval. Additionally, our financial services business is underpinned by Africa’s clear Fintech leader by transaction volumes, M-Pesa, which recently celebrated its 15th anniversary,” he added.

Continental watch

Markets like Tanzania have been instrumental to Vodacom’s broader Africa ambitions.

In April this year Vodacom Tanzania PLC signed a contract with The National ICT Broadband Backbone (NICTBB) worth US$ 4.59-million that will allow the operator to use the government-owned fibre optic cable infrastructure to enhance connectivity in rural Tanzania.

According to a statement released, this investment comes after an initial investment of US$6,223,500 in October 2021 and is positioned to extend high-speed internet facilities upcountry to reach more underserved areas.

“With expanded internet access to remote areas of the country, more people will be able to access digital facilities, such as health services, education delivery, and agricultural information as well as furthering the growth of financial inclusion nationally,” reads an excerpt from the statement.

The deal, inked by Tanzania Telecommunication Company Limited (TTCL) Director General, Peter Ulanga and Vodacom Managing Director Sitholizwe Mdlalose, is set to improve Vodacom’s voice and data traffic across lake, central, and southern regions of Tanzania in a bid to transform the country into a knowledge-based society through the application of ICT.

TTCL manages the NICTBB on behalf of the government.

While the company has made some progress in the market, it has also acknowledged the impact of levies on mobile money transactions.

Joosub added, “Our International operations reported muted revenue growth of 0.6% in the year, impacted by a stronger rand and new levies on mobile money in Tanzania, which has proven to be a setback for our financial inclusion efforts in that country. Despite the impact of the levies, normalised growth came in at 5.6%, showcasing the operational strength of our International portfolio. Our continued investments in our 4G capacity and coverage to enhance our network lead in all our markets continues to pay dividends with data services a key driver of growth. This is evidenced by the 11% increase in data revenue, contributing 20.7% of International service revenue.”

Fintech delivery

Fintech and financial services delivery continues to be a focus for the company and its strategy to engage Africa markets.

In February the company announced a 12.5% increase in financial services revenue to breach the R2-billion mark for the first time in a quarter, according to the operator’s trading update for the quarter ended 31 December 2021.

Joosub described financial services as a strategic priority for the Group, and added that the company’s M-Pesa platform, including Safaricom, “continues to scale at an impressive rate with transaction values up 16.1% to exceed R430 billion per month.”

“In South Africa, the launch of our VodaPay super-app in October last year has exceeded our expectations by attracting 1.4 million downloads and 1.0 million registered users in its first three months. We see VodaPay as a precursor to M-Pesa’s evolution and further strengthening our Fintech position across our footprint.”

Joosub said he is excited about VodaPay’s high adoption rate since its launch in South Africa in October last year.

According to Vodacom, this super-app has attracted 2.2 million downloads and 1.6 million registered users and will offer services ranging from loans and savings, seamless QR and person-to-person payments, to entertainment and personalised shopping experiences, promoting greater financial inclusion.

“M-Pesa across our markets has grown to serve more than 47.1 million customers and 550 000 merchants through 510 000 agents in the DRC, Kenya, Lesotho, Mozambique and Tanzania. M-Pesa processes over 52 million transactions daily with a value of US$324.6 billion during the year. We now serve 60.6 million financial services customers across our footprint, including Safaricom on a 100% basis,” Joosub stated.

Vodacom has also underlined the impact of the Ukraine-Russian war on commodity prices, heightening inflation risk globally which will likely impact customer affordability and weigh on economic growth.

“This will place even greater reliance on our ability to deliver personalised nano pricing through our innovative ‘Just4You’ platform, in addition to other proactive innovations to adjust to shifts in customer behaviour.”

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