Vodacom raises medium-term targets after Safaricom deal boost 

Vodacom Group raised its medium-term growth targets on Monday after completing its acquisition of a controlling stake in Kenya’s Safaricom, while cutting its dividend payout ratio to preserve cash for expansion. 

The South African telecommunications company, majority-owned by Vodafone, said it now expects earnings before interest, tax, depreciation and amortization (EBITDA) and operating free cash flow to grow in the early teens over the medium term, up from its previous target of double-digit growth. 

As part of a review of its capital allocation strategy, Vodacom lowered its dividend payout ratio to at least 65% of headline earnings from 75%. The decision comes just months after the company reaffirmed the higher payout when it released full-year results in May, underscoring how the Safaricom acquisition has reshaped its priorities. 

“The board has reviewed the group’s capital allocation framework to balance investment in network infrastructure, scaling digital and financial services, progressive deleveraging and shareholder returns,” Vodacom said. 

Chief Executive Officer Shameel Joosub said shareholders should still expect higher dividends. “At this revised payout level, we expect to grow the dividend per share for FY2027, based on our current growth outlook and the prevailing economic conditions,” he said.

Safaricom deal reshapes growth outlook 

The strategy follows Vodacom’s increase in its Safaricom stake to 55% from 35%, effective June 30, giving it control of East Africa’s largest telecom operator and one of Africa’s biggest mobile money businesses. 

The transaction expands Vodacom’s reach into faster-growing East African markets and increases the role of digital financial services in its business. The company raised its Vision 2030 revenue target to more than R300 billion ($18 billion) from more than R200 billion ($12 billion), while financial services are now expected to contribute more than 22% of group service revenue, up from about 13%. 

“We are entering a new phase of growth, supported by a more balanced portfolio, broader earnings drivers and increased exposure to some of Africa’s most attractive opportunities,” Joosub said. 

Digital services drive growth

The company’s first-quarter results reflected that shift. Group revenue rose 5.9% to R42.4 billion ($2.54 billion) in the three months ended June 30, while service revenue increased 6.3% to R34.3 billion ($2 billion). Excluding currency movements, service revenue grew 12.6%. 

South Africa remained the slowest-growing market, with service revenue rising 2%, while Egypt led performance with 32.8% local-currency growth, helped by a 73% jump in financial services revenue. Tanzania, the Democratic Republic of Congo and Lesotho also delivered strong underlying growth. 

Financial services revenue climbed 17.8% to R4.5 billion ($269.3 million). Including Safaricom, Vodacom processed $547.9 billion in mobile money transactions over the past year, up 19.1% from a year earlier. 

Africa telecom expansion accelerates

The group also invested an additional R800 million ($47.8 million) in fibre operator Maziv to support its acquisition of Herotel, reinforcing Vodacom’s focus on broadband infrastructure. 

The latest moves highlight a broader shift across Africa’s telecom industry, where operators are directing more capital toward fibre networks, fintech, cloud services and artificial intelligence as traditional mobile markets mature.

The company now serves more than 220 million customers across Africa, with digital financial services and data businesses becoming increasingly important parts of its long-term strategy.