South Africa’s Vodacom Group (VODJ.J) has reported a significant increase in its third-quarter service revenue, with a boost from the inclusion of Vodafone Egypt. The telecoms giant, which is majority-owned by Britain’s Vodafone Group (VOD.L), revealed that service revenue for the three months ending December 31 surged to 31 billion rands ($1.67 billion), marking a substantial 29.7% rise.
When considering a pro-forma basis, which assumes ownership of Egypt from April 1, 2022, instead of December 8, 2022, the service revenue increased by a noteworthy 8.8%. Vodacom’s acquisition of a 55% stake in Vodafone’s Egyptian subsidiary for approximately 43.6 billion rand in 2021 marked the largest deal in the company’s history.
Egypt’s local currency revenue experienced robust growth of 31.5%, largely driven by the strong performance of mobile data, fixed broadband, and financial services. The data traffic also witnessed a substantial 40.7% improvement. Vodacom’s strategic focus on new services, including digital and financial services, fixed broadband, and the Internet of Things (IoT), contributed significantly to its growth. These new services generated 6.2 billion rand, constituting 20.1% of the group’s service revenue, compared to 19.2% the previous year.
Financial services represented the largest component of these new services, growing by 31% to reach 3.4 billion rand in the quarter. This growth was primarily attributed to the successful scaling of new products and a 12% increase in customer numbers. Like its peer MTN Group (MTNJ.J), Vodacom has been undergoing a transformation from a telecom services provider to a technology company, offering a wide range of services, including lending, payments, online shopping, and home appliance control through smartphones.
In its home market, South Africa, Vodacom reported a 4% increase in revenue, reaching 22.8 billion rand. The growth was driven by strong performance in equipment revenue, while service revenue increased by 1.9%, showing a slight slowdown compared to the 4.1% growth in the second quarter.
Vodacom’s expansion into Egypt and its emphasis on diversifying its service offerings have contributed to its positive financial performance in the third quarter. The inclusion of Vodafone Egypt has significantly bolstered its revenue figures, while the growth of new services, particularly in the financial sector, has expanded its business portfolio. The company’s transition from a traditional telecom provider to a technology-driven firm reflects the evolving landscape of the telecommunications industry, where companies are leveraging digital and financial services to enhance their offerings and cater to the changing needs of their customers.
