South Africa’s biggest telecommunications company is changing in front of everyone’s eyes

Vodacom’s proposed takeover of Safaricom and continued push into East Africa are changing its investment case, likely for the better.

While the group continues to grow in its home market of South Africa, East Africa now presents more high-growth opportunities for the telecoms giant.

Over the coming years, Vodacom is expected to transform into an East African giant with a major focus on financial services.

On Tuesday, 10 November, Vodacom released its results for the six months through September 2026, which revealed a strong performance.

The first half of its 2027 financial year is off to a strong start, with group revenue rising 25.6% to R102.5 billion.

This was driven by a 29.4% increase in service revenue to R85.13 billion, aided by the consolidation of Safaricom in the second quarter of FY27.

The group also saw double-digit gains in service revenue in Egypt, Safaricom, and its International business.

Vodacom’s financial services revenue surged by a remarkable 99% to R15.93 billion, supported by the scaling of its fintech platforms and M-Pesa.

The group’s Beyond Mobile division, which includes fixed, digital, and financial services, reached R23.3 billion in revenue, now accounting for 24.7% of group service revenue.

At a group level, this strong top-line growth translated into a 40% increase in EBITDA to R42.66 billion, with the margin expanding to 41.6%.

Broken down by region, South Africa remains the biggest contributor to group EBITDA, accounting for R17.12 billion of the total. 

South Africa saw EBITDA growth of 10.5% in this period. While strong, this lagged the stronger growth seen in Egypt.

Egypt now accounts for R11.02 billion of group EBITDA, up 15.5% in the six-month period.

Kenya-based Safaricom saw its EBITDA rise to R8.54 billion, with a margin of 56.2%. 

Vodacom is currently battling the Kenyan courts to keep control of Safaricom. 

The group increased its stake in East Africa’s largest telecoms firm in June 2026, bringing its interest to 55%.

However, the Kenyan High Court declared in October that the government’s sale of a 15% stake in Safaricom to Vodacom was unconstitutional, ordering the shares to be returned.

Vodacom is appealing this decision and will retain the shares it acquired until judgment is handed down.

Analyst opinion

Anchor Capital equity analyst Sean Culverwell told BusinessDayTV he was impressed by Vodacom’s latest results.

“The telcos have been a shining light in what’s been quite a dim domestic market this year,” he said.

“The reason for this is that the main growth drivers are coming out of Africa and aren’t reliant on the South African consumer.”

While he said it was positive to see Vodacom’s South African prepaid business return to growth, this was not the standout in these results.

“The Safaricom consolidation grows Vodacom’s exposure to financial services and digital business, which somewhat shifts the investment case for the better for us,” he said. 

On top of this, Culverwell said Vodacom’s expansion into less mature regions that are growing faster than South Africa gives the company a good runway for the coming year.

However, this is not to say that it will be smooth sailing for Vodacom as it seeks to expand further into African markets, with the Safaricom dispute presenting a good example of the hurdles to come.

Umthombo Wealth’s Talya Ginsberg told BusinessDayTV that the Safaricom dispute does create some uncertainty regarding Vodacom’s investment case.

“It seems that the telecoms sector will continue to do well, but you do definitely have to price geographic risk into Vodacom and the sector,” she said.