Telecommunications group Vodacom on Monday reported a stronger third quarter, with Group CEO Shameel Joosub saying that the results support confidence in an overall stronger second half performance.

In a trading update for the quarter ended December 31, Vodacom posted group revenue growth of 1.6% to R39.5-billion, impacted by a stronger rand, while group service revenue growth, on a normalised basis, accelerated to 11.6%.

“In particular, the quarter was positively impacted by accelerated growth in South Africa’s prepaid market, in addition to another stellar performance in Egypt and Tanzania,” he said, noting, however, that network operators in Mozambique, including Vodacom, hadbeen hampered by post-election tensions since October 2024.

“While currency headwinds continue to impact various markets where we operate, the focused execution of our strategy has resulted in a resilient operational response to the extent that we remain well on track to deliver on our medium-term financial targets.”

South Africa delivered an improved 3.2% increase in service revenue during the third quarter of 2024, underpinned by a variety of factors, including successful seasonal campaigns, improved consumer environment in the prepaid segment and a 40.6% increase in data traffic.

“Service revenue from beyond mobile was another highlight, increasing by 11.3% and contributing R2.8-billion to South Africa’s total of R16.2-billion,” Joosub commented.

“Having invested R3.2-billion in the quarter, we expect to invest between R11-billion and R11.2-billion of capital expenditure in the current financial year to further enhance customer experience.”

Meanwhile, Egypt remains a star performer having grown service revenue by 44.3% in local currency, well above the rate of inflation, with Egypt financial services revenue up 77.7%.

“Egypt’s strong performance was largely led by clear net promotor score leadership. Commercial momentum was strong in Egypt, with a 40.7% increase in financial services customers to 10.5-million and a 25.6% improvement in data traffic.”

With service revenue of R6.8-billion, Egypt now accounts for 22.3% of the group’s total, closing the quarter with 50.7-million customers, up 6.2%.

During the quarter under review, the International service revenue increased 1.4%, or 7% on a normalised basis, impacted by rand strength and pressure in Mozambique, with Tanzania and the Democratic Republic of Congo (DRC) significant contributors to the normalised growth in this segment.

While the company remains hopeful that the conflict in DRC will reach a resolution, its immediate focus is to safeguard its people, extend relief through its foundation's initiatives, and ensure that customers stay connected.

Across the International business, DRC delivered high single-digit US dollar growth and Tanzania continued to deliver positive local currency results, while normalised M-Pesa and data revenue growth reached 10.2% and 15.4% respectively.

“Our International business customer base reached 58.4-million, up 8.6%, supported by strong commercial execution and a further R1.4-billion network investment in the quarter,” Joosub said.

“Data traffic grew by 31.1%, while smartphone users were up 1.5-million in the quarter to reach 19-million, as we look to accelerate smartphone penetration with innovative financing options, including a new daily repayment model.”

Meanwhile, Vodacom Group’s financial services revenue increased 5.7%, or 17.2% on a normalised basis, to R3.6-billion.

About $437.7-billion had been transacted through the group’s mobile money platforms, including Safaricom, over the last 12 months.

Excluding Safaricom, the group generated R3.6-billion in service revenue in the quarter, up 5.7%, or 17.2%, on a normalised basis.

During the quarter under review, Vodacom Group reported a number of key milestones, including partnering with Orange in the DRC to accelerate rural coverage, launching M-Wekeza in Tanzania to make investments more accessible and introducing a cloud-based handset to reduce the cost of smartphone access in South Africa.

“As part of our digital and financial inclusion drive across our footprint, including Safaricom, we serve over 210-million customers with our sights firmly set on connecting the next 100-million Africans to the digital economy.”

Ethiopia, the continent’s second most populous country, is expected to play a significant role in this ambition and is already making progress with Vodacom’s customer base increasing 63.6% to 7.1-million.

“Additionally, we are well on track to reach our medium-term target of a 25% to 30% contribution to group service revenue from what we now call our beyond mobile services.”

Previously billed as “new services”, beyond mobile encompasses digital and financial services, fixed and Internet of Things and now makes up 21.4% of the group total, having delivered R6.6-billion in service revenue in the quarter.

“Our financial services business, a clear strategic priority for the Group and the largest contributor to beyond mobile, has seen the value of mobile money transactions facilitated by our platforms increase 19.1% in US dollars.

“We now process an impressive $1.2-billion a day. This highlights the scale of this business and solidifies our position as Africa’s largest mobile money platform by transaction value processed,” Joosub said.

Meanwhile, Vodacom Group has appealed the decision by the Competition Tribunal in October regarding the proposed acquisition of a joint control stake in South African fibre operator Maziv.

“We remain firmly of the view that this transaction will accelerate fibre reach in South Africa, fostering economic development and helping bridge South Africa’s digital divide.”