Vodacom Raises Growth Targets After Safaricom Acquisition

South African telecommunications company Vodacom has raised its medium-term growth targets after increasing its stake in Kenya’s Safaricom, reinforcing its long-term expansion strategy across Africa. The company said the acquisition marks a significant milestone in its ambition to grow its telecommunications and financial services businesses across the continent.

Vodacom announced on Monday that it had increased its shareholding in Safaricom to 55% from 35%, giving it a controlling stake in East Africa’s largest telecommunications operator. Following the acquisition, the company upgraded its Vision 2030 revenue target from more than 200 billion rand to over 300 billion rand, reflecting confidence in stronger long-term growth.

The group also reported a 6.3% rise in first-quarter service revenue to 34.3 billion rand, supported by strong performances in Egypt and other African markets. Chief Executive Officer Shameel Joosub said the results highlighted the strength of Vodacom’s diversified operations, with international businesses helping offset slower growth in South Africa.

Vodacom raised its medium-term targets for earnings before interest, tax, depreciation and amortisation (EBITDA) and operating free cash flow growth to the early teens, up from its previous target of double-digit growth. Financial services are also expected to contribute more than 22% of group service revenue following the Safaricom acquisition, compared with 13% previously. Revenue from the segment increased by 17.8% during the quarter to 4.5 billion rand.

The company also announced a reduction in its dividend payout ratio to at least 65% of headline earnings from the previous 75%, describing the move as part of a broader review of its capital allocation strategy.

SOURCE: Reuters