Vodacom reports strong growth driven by Egypt and fintech, but SA margins weaken
Key topics:
Egypt and fintech drive growth, with double-digit gains across Vodacom’s African markets.
South Africa under pressure, as prepaid revenue and margins decline.
Maziv deal approved and “Please Call Me” dispute settled, clearing long-standing hurdles.
Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.
Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.
If you prefer WhatsApp for updates, sign up to the BizNews channel here.
BizNews Reporter
Vodacom Group Limited has reported a strong set of interim results for the six months ended September 30, 2025, underscoring the resilience and agility of the business amidst a more stable macroeconomic and currency backdrop. The performance confirms an "ideal start" to delivering on the company's bold Vision 2030 ambitions. Key metrics indicate robust growth across the Group, primarily propelled by exceptional performances in Egypt and the International business segment, though the core South African market experienced margin contraction.
Group financial highlights: A robust performance
The Group delivered robust financial growth, with several headline measures tracking above medium-term targets.
Service revenue and earnings: Group service revenue grew by 12.2% to R65.8 billion, increasing 13.6% on a normalised basis, which is tracking above the medium-term target of double-digit growth. Total Group revenue reached R81.6 billion, up 10.9% (12.1% normalised).
Profitability showed significant leverage:
EBITDA: Group Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) grew 14.7% to R30.5 billion (14.8% normalised), surpassing the targeted sustained double-digit EBITDA growth (at least 10%) over the medium term outlined in Vision 2030.
HEPS: Headline earnings per share (HEPS) increased sharply by 32.3% to 467 cents per share (cps).
Dividend: The Board declared an interim dividend of 330 cps, reflecting a 15.8% increase and consistency with the policy of paying at least 75% of headline earnings.
Cash flow and balance sheet strength: The Group generated strong cash flow, with operating free cash flow surging 71.0% to R10.0 billion. Critically, Group free cash flow moved into positive territory at R2.7 billion, a significant improvement from the prior year's negative R1.076 billion. The balance sheet strengthened, as evidenced by the net debt to EBITDA ratio reducing from 1.1x in the prior year to 0.9x. The return on capital employed (ROCE) also improved by 3.8 percentage points to 26.3%.
Regional and segment successes
Explosive growth in Egypt: Egypt was the undisputed standout performer and the key driver of the Group's result. In local currency, Egypt’s service revenue growth was exceptional at 42.3% (48.3% normalised). This sterling performance was supported by a strong summer campaign, robust data traffic growth of 21.9%, and rapid adoption of Vodafone Cash. Egypt also launched 5G services in June 2025.
International business recovery: The International business segment, encompassing the DRC, Lesotho, Mozambique, and Tanzania, reported a strong recovery. Service revenue grew 12.2% (13.3% normalised) to R16.7 billion. Encouragingly, all four markets saw accelerated growth rates in the second quarter. International EBITDA increased substantially by 35.0% (33.8% normalised).
Fintech and beyond mobile momentum: The strategy to grow services beyond traditional mobile connectivity is paying dividends. Services outside of mobile—including financial services, digital services, fixed, and IoT—contributed 21.8% of Group service revenue.
Financial services revenue grew 20.3% (21.5% normalised) to R8.0 billion.
The Group now serves 93.7 million financial services customers (a 13.1% increase).
M-Pesa, Africa’s largest mobile money platform (including Safaricom), processed over US$476.8 billion in transaction value over the last year.
Safaricom (Associate): Safaricom delivered an excellent performance, supporting the Group's operating profit growth. In local currency, Safaricom service revenue increased by 11.1%. The Kenyan operation saw M-Pesa revenue grow 14.0%, and mobile data revenue surpassed voice revenue for the first time. Losses at the greenfield Ethiopian operation are moderating, with customer numbers reaching 11.1 million, up 83.7%.
Areas of challenge and concern
While the Group figures are strong, analysis of the South African results reveals pressure points:
South Africa financial performance: South Africa's service revenue growth was stable but modest, increasing 2.2% to R31.7 billion, underpinned by the contract segment. However, profitability was negatively affected:
EBITDA decline: South Africa EBITDA declined 5.3% to R15.5 billion.
Operating profit: South Africa operating profit reduced by 11.0%.
Management attributed the EBITDA decline to a combination of a softer prepaid performance and a one-off cost incurred during the period.
Prepaid pressure in South Africa: The domestic prepaid segment faced notable challenges:
Revenue decrease: Prepaid mobile customer revenue decreased 1.6% to R13.2 billion.
Customer base contraction: The prepaid base declined by 7.4% as Vodacom churned inactive customers in prior quarters. This decline reflects pressure on the consumer wallet and heightened competitive intensity.
Resolution of key matters and strategic progress
The reporting period included finality on two long-standing, significant issues in South Africa:
Maziv acquisition: The Group’s proposed acquisition of a 30% stake in Maziv received approval with conditions from the Competition Appeal Court (CAC) in August 2025, overturning the Competition Tribunal's earlier prohibition. This transaction is expected to accelerate network expansion.
"Please Call Me" settlement: The long-running "Please Call Me" (PCM) legal dispute was settled out of court on November 4, 2025, after the Board approved a settlement agreement. The settlement has been accounted for in the interim results.
Overall, Vodacom demonstrated strong execution on its Vision 2030 strategy, particularly leveraging its diversified portfolio across Africa. The reliance on high-growth markets like Egypt and strong contributions from financial services mitigated the operational and financial pressures experienced within the South African market. The Group's strong financial position (low leverage) supports its continued investment strategy, which totalled R9.4 billion in capital expenditure during the period.