Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Business of Tech

Vodacom earnings rise despite pandemic woes

Article Image
Vodacom managed to increase full year revenue by over 8% despite challenges caused by the COVID-19 pandemic and price cuts in South Africa.

The SA-headquartered operator increased revenue to R98.3 billion (US$7 billion) for the year ended March 31, 2021, as service revenue grew 5.8% to R77.6 billion ($5.5 billion).

Vodacom Group CEO Shameel Joosub confirmed that the group saw a R2 billion ($142.9 million) service revenue impact from zero-rating peer-to-peer (P2P) M-Pesa transactions in its international markets, due to COVID-19.

The company also lost R3 billion ($214.3 million) in service revenue due to data price drops in South Africa last April, and the R176 million ($12.6 million) cash and in-kind donations made by the Vodacom and Vodafone Group Foundations in response to the pandemic.

The group added 8.2 million customers during the year, bringing its total up to 123.7 million customers if you include its investment in Kenya's Safaricom.

Vodacom's group earnings per share increased 4.2% and headline earnings per share grew 3.7%.

Network investment

"Given the sudden shifts in customer behavior patterns, we invested heavily in the resilience of our networks to cope with significant increases in mobile data traffic volumes to keep families connected, enable businesses to operate, facilitate online learning and assist governments in providing critical services," Joosub said.

Vodacom Group spent R13.3 billion ($950 million) in capex during the year to improve network infrastructure, including R10.1 billion ($721.5 million) in South Africa alone. The group has invested R62.4 billion ($4.5 billion) into its networks over the past five years.

"In South Africa, service revenue grew by 7% on the back of increased data usage, our highly successful summer campaign and demand for financial services," Joosub said.

Vodacom's international operations – of Lesotho, Tanzania, Mozambique and Democratic Republic of Congo (DRC) – reported muted service revenue growth of just 1.6% in the year, with a stronger second half helping offset the significant impacts of COVID-19 earlier in the year.

"This performance was characterized by disruption to our commercial activities as a result of the informal structure of the economies in which we operate, currency volatility, increased pressure on consumer spend, free M-Pesa P2P transactions and the impact of service barring in Tanzania due to biometric registration compliance," Joosub explained.

Vodacom is also hoping to expand its operations into Ethiopia and in April bid for a telecoms license in the Horn of Africa nation, as part of a consortium made up of itself, Vodafone and driven by Safaricom. The group expects to hear in the next month if its bid has been successful.

M-Pesa's ups and downs

"Zero-rating P2P M-Pesa transactions for the majority of the financial year was the right thing to do for our customers and facilitated economic activity," Joosub said.

Despite Safaricom's M-Pesa revenue decline, the free P2P transactions did introduce the M-Pesa ecosystem "to a significantly broader base and continues to support accelerated platform growth and customer adoption of digital channels."

Through M-Pesa, Vodacom and Safaricom now process $24.5 billion a month in transaction value, up 63.5% for the year.

From January 2021, all of Vodacom and Safaricom's markets re-implemented P2P charging on M-Pesa.

Fintech future

A major bright spot was Vodacom's financial services offering, which saw customers increase by 12.9% to 57.7 million customers, including Safaricom.

The South African financial services business and M-Pesa delivered service revenue of R6.9 billion ($493 million), up 15%, and contributed 8.9% of consolidated service revenue.

Revenue growth was underpinned by the continued success in SA of the Airtime Advance product, which saw customers increase by 17.3% to 10.8 million.

The group advanced R12 billion ($857 million) in airtime in South Africa during the year, an increase of 21%. In the fourth quarter, Airtime Advanced amounted to 43% of total prepaid recharges in the quarter.

Joosub said the insurance business was doing well and that, profit wise, Vodacom was now South Africa's fifth-largest insurance provider. Insurance policies in SA increased by 8.3% to 2.1 million.

"We already provide financial services to 57.7 million customers, including Safaricom, with our 'nano' payments, lending and savings solutions supporting financial inclusion. We see significant opportunities ahead, in both our Consumer and Vodacom Business segments, across digital and financial services, as we enhance our existing AI capabilities and real-time management information systems with our landmark Alipay agreement."

Digital evolution

Joosub said the group remains focused on being a leading pan-African technology company and investing more into financial, digital and lifestyle services.

In particular, Joosub said Vodacom was excited about its partnership with Alipay and the imminent launch of its single lifestyle super app, VodaPay, in South Africa.

He said VodaPay would have a soft launch in the second quarter of the new financial year with a full launch by the third quarter.

"Our super-app will offer services ranging from loans and savings, seamless QR and person-to-person payments, to entertainment and personalized shopping experiences, promoting greater financial inclusion.

"We see this super-app as a precursor to M-Pesa's evolution, supporting accelerated growth across our financial services’ businesses and assisting us in connecting the next 100 million African customers so that no one is left behind," Joosub added.

Related posts:

*Top image is of Vodacom Group CEO Shameel Joosub (Source: Vodacom).

— Paula Gilbert, Editor, Connecting Africa

Innovation hub


SA startup Sendoff is digitizing funerals

South African startup Sendoff is a full-service funeral app that is digitizing the way funerals are organized.


SA's Homemation wants smart homes to be seamless

Through its Control4 operating system, South Africa's Homemation highlights that operating smart homes should be a seamless experience.

More Innovation hub

Partner perspectives

5G is lighting up the future of North Africa
By Chris Meng, VP of Huawei Northern Africa Carrier Business Department

The moving target that is telecoms fraud
By Clémentine Fournier, Regional VP Sales, Africa, BICS

How mobile operators in Africa can address signalling threats and secure the network
By Katia Gonzalez, Head of Fraud and Security at BICS

All Partner Perspectives

Latest video

More videos

Guest Perspectives


Omdia View: June 2022

By Omdia Analysts

5G was the major news trend across Africa in June, as Orange became the first operator to launch 5G in Réunion and operators in Senegal accelerated their 5G plans despite spectrum delays.


Omdia View: May 2022

By Omdia Analysts

SpaceX-owned Starlink's plans to launch a satellite broadband service in Africa was a major highlight in May 2022, says Omdia's analysts.

More Guest Perspectives

Upcoming events

Africa Tech Festival
November 7-11, 2022
CTICC, Cape Town
More Upcoming events

Flash poll

All polls

Archived webinars

Africa Green ICT: Lighting Up a Sustainable Continent

The ICT industry is the leading industry in the commitment to carbon neutrality, whose focus has shifted from setting ambitious targets to taking initiatives. The push for zero-carbon and for green energy development, it isn't just about CSR – it's also good for sustainable business.

The path to sustainable development requires green energy. Governments are looking at potential policy approaches to make green energy more widely available and affordable. Without sustainable energy, there will be no digital transformation and no chance of making Africa more economically competitive in the post-pandemic era.

Africa Green ICT Webinar 2022 will bring together ICT industry leaders and senior industrial analysts to provide insight, best practices and key learnings on how to achieve zero-carbon targets and practice green development in Africa.

More Webinars

Sponsored video

More videos

AfricaCom perspectives


Digital inclusion as a catalyst for economic empowerment: Mastercard's Imelda Ngunzu

Mastercard's Imelda Ngunzu talks to Connecting Africa about how digital payment solutions and mobile money are transforming the lives of small business owners, women and marginalized groups in East Africa.


Accelerating women in STEM: In conversation with GirlCode's Tinyiko Simbine

GirlCode co-founder and CFO Tinyiko Simbine talks about why it's important to help girls and young women excel in science, technology, engineering and mathematics (STEM) fields.


How Poa Internet is unlocking meaningful connectivity in East Africa

Poa Internet's CEO Andy Halsall shares his views on what it takes to develop last-mile connectivity and get Africans online in a meaningful way.

More AfricaCom perspectives

Like us on Facebook

Newsletter Sign Up

Sign Up