Vodacom cements position as Africa’s most valuable mobile operator

Vodacom’s acquisition in Egypt helped boost sales by more than a third in the first half, aiding the company’s position as the most valuable mobile operator in Africa.

Sales at Johannesburg-based Vodacom climbed to R72.8 billion in the six months through September, it said in a statement Monday.

Cross-town rival MTN still claims bigger revenue and a wider presence on the continent, even as its struggles in Nigeria continue to weigh on its share price.

Risk profile

Still, Vodacom’s recent move into Ethiopia adds some risk and further complexity to its operations. The Horn of Africa nation — the continent’s second-biggest by population — has struggled with sporadic unrest and debt problems. 

“New ventures in Egypt and Ethiopia add to the group’s growth but alter the risk profile,” said Bloomberg Intelligence analyst John Davies.

Vodacom may also continue to outperform MTN in their home market of South Africa, he said. 

Vodacom has spent $1.6 billion in Ethiopia, including the purchase of its operating license, Chief Executive Officer Shameel Joosub said in an interview. “It comes with its challenges, as anything does when you go into a new market.”

Vodacom’s shares fell as much as 7.5% and were 5.1% lower as of 1:56 p.m. in Johannesburg, the biggest intraday drop in almost five months. The earnings missed average analyst estimates.

The key focus in Ethiopia is to grow customers to about 7 million people by the end of the year while rolling out more sites, Joosub said. That’s as the issuing of a third license appears to be on hold, he said.

“We are going to use this opportunity to grow as much as we can,” he said.

Vodacom also has 73.5 million financial services customers, including through Safaricom, transacting $1 billion every day. Vodacom expects to generate $1.7 billion in revenue from its financial services business, said Joosub. 

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