Johannesburg – Vodacom Group has announced a significant reduction in its dividend policy, pivoting from generous shareholder payouts to aggressive reinvestment as the telecommunications giant embarks on an ambitious expansion phase following its landmark acquisition of Safaricom.
In a trading update for the quarter ended 30 June 2026, the Vodacom board revealed it has revised the dividend policy to a payout of at least 65% of headline earnings, down from previous levels.
This strategic shift signals the company’s determination to prioritise network infrastructure investment, digital and financial services scaling, and deleveraging over immediate shareholder returns.
Despite the reduced payout ratio, Vodacom expects to grow the dividend per share for full year 2027, supported by its current growth trajectory and prevailing economic conditions.
A Defining Moment: Safaricom Integration Reshapes Portfolio
The quarter marked a watershed moment with Vodacom increasing its stake in Safaricom from 35% to 55%, effective June 30, 2026.
The transaction significantly enhances the group’s scale, diversification, and long-term growth prospects, adding exposure to Africa’s most attractive opportunities in connectivity, digital services, and financial inclusion.
“This strategically important transaction represents a major milestone in our Vision 2030 journey,” said Shameel Joosub, Vodacom Group CEO.
“We are now entering a new phase of growth, supported by a more balanced portfolio, broader earnings drivers, and increased exposure to Africa’s most attractive opportunities.”
Upgraded Growth Targets Reflect Enhanced Ambition
The strengthened portfolio has prompted the Group to upgrade its medium-term guidance:
- EBITDA growth target: Upgraded from double-digit to early-teens growth
- Operating free cash flow target: Upgraded from double-digit to early-teens growth
- Vision 2030 Group revenue ambition: Raised from R200 billion to R300 billion+
Financial services now contribute more than 22% of Group service revenue (up from 13%), reinforcing Vodacom’s leadership in African fintech.
Q1 2026 Trading Performance Highlights
Group revenue increased 5.9% (11.4% normalised) to R42.4 billion, impacted by translation effects of the stronger rand.
Group service revenue rose 6.3%, with normalised growth accelerating to 12.6%, tracking favourably against medium-term targets.
| South Africa | Service revenue +2.0%, supported by improved prepaid performance |
| Egypt | Service revenue +32.8%* (local currency); Financial services revenue +73.0% |
| International Business | Service revenue +4.1% (rands); Normalized growth +14.0%* |
| Group Financial Services | Revenue +17.8% to R4.5 billion; Normalized growth +27.0%* |
Beyond mobile services contributed R7.8 billion, equivalent to 22.8% of Group service revenue.
Mobile Money Milestone
Including Safaricom, Vodacom processes an impressive $547.9 billion in mobile wallet transaction value annually, representing 19.1% growth — emphasising the group’s dominant position in African financial inclusion.
Capital Allocation Framework Reset for Growth
“Against this enhanced growth trajectory, the Board has reviewed our capital allocation framework to ensure flexibility and an appropriate balance between investing in network infrastructure, scaling digital and financial services, progressive deleveraging and delivering attractive shareholder returns,” Joosub explained.
The revised dividend policy reflects management’s confidence in the group’s growth prospects and commitment to reinvesting capital at higher rates of return.
Fixed Network Expansion
Vodacom advanced its fixed strategy in South Africa by investing a further R800 million into Maziv, supporting the completion of the Herotel transaction.
The investment positions Maziv to accelerate fibre reach, fostering economic development and bridging South Africa’s digital divide.
Innovation and Social Impact
During the quarter, Vodacom launched Africa’s first mobile money tap-to-pay solution in Tanzania, enabling 22 million+ M-Pesa customers to make seamless contactless payments.
In DRC, anonymised mobile data analytics are supporting Ebola preparedness efforts, while Ethiopia partnerships are creating sustainable livelihood opportunities for vulnerable youth.
Outlook
“Following the completion of milestone transactions, Maziv and Safaricom, Vodacom has shaped its strategy for the future. Our focus now shifts to unlocking the full potential of our portfolio through disciplined execution, innovation, and capital allocation,” Joosub concluded.
Vodacom remains well-positioned to deliver sustainable growth and attractive returns, guided by Vision 2030 — connecting people for a better future.
*This article first appeared in our sister publicaiton techfinancials.co.za
