Vodacom’s growth strategy over the next few years is focused on maximising the company’s growth potential in its existing footprint rather than looking for new geographic opportunities.
This is according to Vodacom spokesperson Byron Kennedy, who told Daily Investor that the company’s subscriber base of 186 million currently represents less than 40% of the population across its footprint.
The telecommunications company recently completed its acquisition of Vodafone Egypt. For this deal, Vodacom’s parent company Vodafone agreed to transfer its 55% interest in Vodafone Egypt to Vodacom in exchange for the issuance of 242 million new Vodacom shares plus cash of R10.8 billion.
Vodacom also recently launched in Ethiopia, a highly competitive market due to its growing population and low mobile penetration rate.
The company beat competitors like MTN in the country by joining forces with a consortium which consisted of Vodafone, Safaricom, CDC Group, and Sumitomo Corporation.
While Vodacom has the lowest level of participation in the consortium, with a shareholding of 6.2%, it now only competes with the Ethiopian government to provide mobile services in the country.
Government-owned Ethio Telecom was the only provider of telecommunications services in the country.
However, to privatise the industry, the government offered two mobile telecommunication licences to private operators, which were later reduced to one.
Therefore, Vodacom’s venture into Ethiopia opened up many opportunities in the country, which are already starting to show as Safaricom Ethiopia was recently awarded a mobile financial services licence.
According to Kennedy, “Following the acquisition of Vodafone Egypt and our commercial launch in Ethiopia (October 2022, second operator), our footprint covers a population across Africa of over half a billion people and more than 40% of Africa’s gross domestic product.”
“We see significant growth opportunities within our footprint, across core mobile and new services,” he said.
Vodacom wants these new services – which include financial and digital services, the Internet of Things, and fixed services – to comprise 25% to 30% of the company’s service revenue over the medium term. Currently, these services comprise 19% of service revenue.
The company is also targeting mid to high single-digit growth in service revenue and high single-digit growth in EBITDA over the medium term.
“This growth will be in part from our core mobile services but accelerated by our new service areas,” said Kennedy.