Vodacom’s $1 billion a day fintech juggernaut

Vodacom’s fintech platforms process transactions worth $1 billion (R18.7 billion) per day from its 74 million financial services customers across Africa. 

This was revealed in Vodacom’s results presentation for the six months ended 30 September 2023, which showed solid results for the telecoms giants.

Group revenue was up 35.5% to R72.8 billion, boosted by the acquisition of Vodafone Egypt, which was the largest acquisition in Vodacom’s history. 

Financial services make up a relatively small portion of this, with revenue of R6.2 billion in the six-month period. 

In particular, the volumes and value of transactions on the company’s fintech platforms have skyrocketed. 

In the last 12 months, Vodacom’s mobile money platforms processed $370.7 billion (R6.9 trillion) in transaction value. 

Total transactions reached 29.3 billion, increasing by 32.4%. This translates into an average of 80.2 million transactions per day with a value of over $1 billion (R18.7 billion) per day. 

However, it has been difficult for Vodacom to translate this immense scale into revenue and profit at a group level. 

The contribution of financial services to Vodacom’s service revenue was only 10% in the six months to the end of September. 

This is partly because most of Vodacom’s fintech revenue comes through Safaricom’s M-Pesa, of which Vodacom only has an effective interest of 34.94%. 

Thus, the company only sees a fraction of the total revenue generated by M-Pesa across its 4.4 million monthly active users in Africa. 

When reporting its results, Vodacom’s effective interest of 34.94% in Safaricom is accounted for as an investment in associate. Thus, the results presented account for Safaricom on a 100% basis, inflating the performance of the financial services unit.

Source: Vodacom’s Interim Results Presentation

On the other hand, while Vodacom’s South African fintech offering, VodaPay, showed significant growth in downloads, merchants, and offerings, this did not reflect on the company’s bottom line. 

Vodacom CEO Shameel Joosub said that it is still early days for VodaPay when presenting the company’s results. 

He outlined the company’s plan for the super-app, which will try to mimic the strategy of M-Pesa and Vodafone Cash in Africa. 

Joosub said that Vodacom will integrate its own products and services, alongside offerings from partners, on the app. 

“We have not taken a decision to monetize financial services yet, although we understand the opportunity,” he said.

In time, the existing Vodacom app will be phased out, and customers will have to use the VodaPay app to purchase airtime and data. 

VodaPay’s merchant network grew to over 10,000, with over 7.6 million app downloads and 100 mini-apps on the platform.