Vodacom planning fibre partnerships to accelerate rollout

Vodacom, Africa’s largest wireless carrier, said it is planning fibre partnerships with other mobile operators and financial investors, potentially alleviating the costs of rollout and rural connectivity. 

Vodacom CEO Shameel Joosub said the company was “busy finalizing” certain joint venture agreements.

The company will also try and get a fiber expansion deal with Remgro’s Community Investment Ventures Holdings, valued at $700 million, over the line with South African competition authorities later this month, after the deal was blocked initially.  

“We are partnering either with local providers or financial investors, to introduce fiber, as well as rural coverage through JVs into countries,” said Joosub in response to Bloomberg questions on a media call.

“This will further our ambition of making sure that everybody is connected with mobile and with fixed connections, and satellite partnerships.”

African carriers have been investing heavily in their own infrastructure, seeing an opportunity to monetize services offered on their networks, towers and data centers.

The continent is home to the world’s fastest-growing population and local carriers are seeing young and tech-savvy users spending more time on their devices to access everything from entertainment to financial services. Vodacom is pushing an ambitious fiber expansion to capture that user base. It’s an expensive exercise, with tie-ups set to ease that financial burden. 

Vodacom has split out ownership of its fintech and infrastructure operations, as have peers including Airtel Africa and MTN. The decision is likely driven by a desire to create strategic partnerships rather than by financial engineering, said Bloomberg Intelligence media and telecoms analyst John Davies.

The company’s fintech operations, particularly in Egypt and South Africa, plus mobile data across its whole footprint, may boost momentum going into fiscal 2025, he said. 

The Johannesburg-based company declared a full-year dividend that missed estimates as startup losses and currency pressures in its newest territories trimmed headline earnings.

The dividend for the year ended March 31 is R5.90 per share, down from R6.70 the previous year, Vodacom said in a statement on Monday. The payout compares with an average estimate for 6.35 rand by analysts in a Bloomberg survey.

Vodacom shares were trading 2.36% lower on Monday at 10.05 a.m. in Johannesburg on Monday. That valued the firm at R191 billion.  

While the group increased revenue by 26% to 150.6 billion rand, net income declined 2.8% to 16.3 billion rand.

A combination of startup losses in Ethiopia, higher finance and energy costs and weaker exchange rates across markets including Egypt contributed to a 10.8% decline in headline earnings, said Joosub. Still, the group expects efforts to diversify its footprint and product mix will unlock strong returns over the medium term, he said.

Vodacom remains committed to spending 13% to 14.5% of overall revenue on capital expenditure, Joosub said. 

Last year, the company started using a new dividend policy at least 75% of headline earnings — down from 90% — as it seeks to preserve funds to invest in Egypt and Ethiopia.