JSE-listed Vodacom on Wednesday reported that its group revenue expanded 1.5% to R36.2-billion, impacted by foreign exchange rate headwinds, but boosted by its operations in Egypt, during the three months ended June 30.

Group service revenue increased 10% on a normalised basis, as Vodacom’s revenue diversification strategy – by product and geography – starts bearing fruit in a challenging economic environment in recent years.

“This is evidenced by the 10% growth in normalised group service revenue to R29-billion in the first quarter – exceeding our medium-term target – as well as the 16.8% increase in normalised group financial services revenue to R3.3-billion,” said Vodacom Group CEO Shameel Joosub in a trading update for the quarter ended June 30.

The service revenue from Vodacom Group’s South African operations increased 1.8%, supported by an improved prepaid performance and price adjustments that delivered greater value to customers.

Data traffic grew 31.3%, supported by additional data allocations and good growth in smart devices, while ‘beyond mobile’ services, which was previously categorised as new services and includes digital and financial services, fixed and the Internet of Things, increased by 6.3%, contributing R2.6-billion to South Africa’s service revenue of R15.3-billion.

“Having invested R1.9-billion in the quarter, we expect to invest around R11.5-billion of capital expenditure in the current financial year to further enhance customer experience.”

Meanwhile, Egypt grew service revenue 43.7% in local currency, with Egypt financial services revenue up 87%.

“Across our geographic segments, Egypt remains a star performer having grown service revenue at 43.7% in local currency, well above the rate of inflation,” Joosub commented, noting that Egypt’s strong performance was underpinned by clear NPS leadership and network differentiation, evidenced by its network being ranked “Best in Test” by umlaut (part of Accenture).

Commercial momentum was strong in Egypt, with a 47.9% increase in financial services customers to 8.7-million and a 34.7% improvement in data traffic.

With service revenue of R6.4-billion, Egypt now accounts for 21.9% of the group’s total, ending the quarter with 47.4-million customers, up 6.1%.

The group’s International service revenue increased 2.3%, supported by strong growth in Tanzania and the Democratic Republic of Congo (DRC).

“Across our International business our investments into new spectrum in DRC, Mozambique and Tanzania and a 19.7% increase in 4G sites across the portfolio are evident in the 5.7% normalised growth in service revenue to R7.4-billion.”

The DRC delivered high single-digit US dollar growth and Tanzania continued to deliver excellent local currency results, while normalised M-Pesa and data revenue growth were strong at 10.9% and 15.5%, respectively.

“Our International business customer base reached 55-million, up 6.4%, supported by strong commercial execution and a further R1.1-billion network investment in the quarter.”

Joosub pointed out that data traffic increased by 29.6% while smartphone users increased by 500 000 in the quarter to reach 16.4-million, as Vodacom Group accelerated smartphone penetration with innovative financing options, including a new daily repayment model.

Service revenue from Vodacom’s beyond mobile services contributed R6-billion in the quarter under review, which equates to 20.8% of the group total, and is well on track to reach the group’s target contribution of 25% to 30% over the medium term.

“Financial services is a clear strategic priority for the group and remains the largest component of beyond mobile services. We now process $400-billion in mobile wallet transaction value annually, highlighting the scale of this business,” he said.

“I was particularly pleased with the growth of M-Pesa services that aim to deepen financial inclusion, such as loans, savings, international money transfer and merchant services.”

An 8.7% increase in group financial services revenue to R3.3-billion was also supported by rapid local currency growth of 87% in Egypt, and strong growth in South Africa within the insurance and Airtime Advance segments.

“Our super-apps – VodaPay, Vodafone Cash and M-Pesa – are key to furthering our financial services ambitions as they integrate our own products and services with the best offerings from our partners.”

Meanwhile, during the first quarter of 2024, Vodacom Group officially celebrated its thirtieth birthday, having signed up its first customer on June 1, 1994, when the company switched on its network in South Africa.

“Three decades later, the Vodacom Group serves more than 200-million customers across DRC, Ethiopia, Egypt, Kenya, Lesotho, Mozambique, South Africa and Tanzania – a footprint that covers more than half a billion people and is almost 12 times greater than when we launched,” Joosub concluded.