Vodacom’s financial services growth in numbers
Vodacom’s financial services continue to show strong growth, and the mobile operator is expanding its offering through its VodaPay Super App.
To fully appreciate Vodacom’s strong growth in financial services, you have to go back to 2017 when it acquired a 34.94% indirect shareholding in Safaricom.
Safaricom is the leading mobile operator in Kenya, with a market share of 71% at the time of acquisition.
Kenya’s mobile penetration is much lower than South Africa’s, which means the country has strong growth potential.
Another attractive part of the Safaricom deal was M-Pesa, a mobile phone-based money transfer service that offers payments and micro-financing.
Financial services are an important new revenue stream for mobile operators, and M-Pesa is the blueprint of what is possible in Africa.
M-Pesa was launched in Kenya in 2007 and quickly expanded to neighbouring countries as people in these areas did not use traditional banking solutions.
Besides its M-Pesa play, Vodacom has launched many new financial services, including insurance, life and funeral schemes, airtime advances, business advances, and payment solutions.
Through these products, Vodacom has grown its financial services revenue to 11% of total service revenue in its Q3 2022 results.
Since 2020, the quarter-on-quarter growth of this segment has averaged over 5%.
To further expand its financial services, Vodacom has developed its VodaPay Super App in partnership with Alibaba.
The VodaPay app brings all of Vodacom’s existing financial products together with an in-app wallet and adds additional eCommerce services to the platform.
The VodaPay app is already available in South Africa, with plans to expand to Egypt and other countries where Vodacom operates.
Although Vodacom has a strong focus on its South African operations, where it generates the most revenue, the financial services’ growth is far stronger in its international operations.
In its latest results release, Vodacom said financial services were its fastest-growing segment, reporting a normalised 16.2% year-on-year increase in its revenue.
The South African region saw particularly strong growth in insurance products, with the Vodapay app aiding in the success.
It bodes well for a more diversified offering throughout Africa and for growing its revenue in services other than voice and data.