Vodacom is painting Africa red

Vodacom trimmed its dividend payout plan and raised its revenue, earnings, and cash flow goals as the wireless carrier seeks to reinvest capital in its higher-growth eastern and northern African businesses. 

The board updated the dividend policy to a payout of at least 65% of headline earnings “to reinvest capital at higher rates of growth and attractive returns,” it said in a statement Monday. That compares with 75% previously. 

“At this revised payout level, we expect to grow the dividend per share for fiscal 2027, based on our current growth trajectory and the prevailing economic conditions,” the South Africa-based company that’s majority-owned by the UK’s Vodafone said.

Following Vodacom’s acquisition of a controlling stake in Safaricom, East Africa’s biggest mobile-network operator, the group is 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.” 

That has prompted the company to raise its medium-term targets for earnings before interest, tax, depreciation and amortisation and for operating free cash flow to early-teens growth from double digits previously. 

The operational momentum has prompted Vodacom to raise its 2030 revenue goal to R300 billion from R200 billion previously. 

Vodacom’s revenue for the first quarter ended June 30 increased 6% to R42.4 billion, in line with the median estimate by analysts surveyed by Bloomberg.