Vodacom’s African Dominance: Why Emerging Markets and M-Pesa Signal Explosive Growth Ahead

Vodacom Group (VOD.JO), Africa’s telecom and fintech powerhouse, has delivered a masterclass in leveraging high-growth African markets and digital financial services. With fiscal year 2025 (FY25) results showcasing a 10.9% revenue surge to 152.2 billion Rand and M-Pesa’s record-breaking $450.8 billion in transaction volume, the company is positioned to capitalize on the continent’s digitization boom. Its strategic expansion in Egypt and Tanzania—where service revenue soared 45.2% and 20.5%, respectively—and its leadership in mobile money make it a top play on Africa’s economic transformation.

The Growth Engine: Egypt and Tanzania Lead the Charge

Vodacom’s dominance is underpinned by two markets delivering exceptional momentum:
- Egypt: A 45.2% jump in local currency service revenue, driven by strong uptake of Vodafone Cash (its mobile money platform) and fixed/mobile connectivity. With over 50 million customers, Egypt now accounts for 23% of group service revenue. Currency stability and improved customer satisfaction (net promoter scores) have unlocked this growth, positioning Egypt as a cashflow engine.
- Tanzania: A 20.5% rise in service revenue, fueled by M-Pesa’s expansion and commercial momentum. Tanzania’s EBITDA grew 25.2%, highlighting the profitability of this market as digital adoption accelerates.

M-Pesa: The Financial Services Powerhouse

M-Pesa, Africa’s largest mobile money service, processed a staggering $450.8 billion in transactions in FY25—a 18.3% year-on-year jump. This growth is not merely transactional; it’s structural. The M-Pesa Super App now boasts 6.7 million active users and 1.2 million merchant partners, enabling savings, credit, and real-time payments across six countries. By embedding financial services into mini-apps, Vodacom is deepening customer engagement and monetizing Africa’s unbanked population.

The financial impact is clear: M-Pesa contributed 11.6% to group service revenue and 20% to profit before tax. Its financial services revenue grew 17.6% to R14.0 billion, proving that digital wallets are more than a side business—they’re the core of Vodacom’s future.

Risks Mitigated: Currency, Capital, and Dividends

Critics of African equities often cite currency volatility and underinvestment as headwinds. Vodacom has systematically addressed these:
1. Currency Stability: Egypt’s currency reforms and improved macroeconomic conditions have reduced foreign exchange headwinds, a major tailwind for profitability.
2. Capital Expenditure: The company invested R20.3 billion in FY25 to expand networks, improve energy resilience (e.g., R11.6 billion in South Africa alone), and prepare for future growth. FY26 plans include over R20 billion in capex, targeting fiber infrastructure and emerging markets like Ethiopia (customer base doubled to 8.8 million).
3. Dividend Resilience: Despite macro challenges, Vodacom raised its dividend by 5.1% to 620cps, reflecting its ability to sustain payouts while reinvesting. With headline earnings per share (HEPS) up 1.3%, the dividend policy (at least 75% of HEPS) ensures shareholders benefit from growth.

The Prize: Africa’s Digital Future

Vodacom’s Vision 2030 aims to expand its customer base to 260 million, including 120 million financial services users. With mobile penetration at 50% across sub-Saharan Africa, there’s ample room to grow. The company is also a beneficiary of Africa’s $1.3 trillion digital economy opportunity by 2025 (GSMA estimate), fueled by fintech adoption and cross-border connectivity.

Why Act Now?

• Valuation: At current levels, Vodacom trades at 8.2x 2025E EV/EBITDA, a discount to global peers.
• Execution Track Record: The FY25 results confirm its ability to navigate macro challenges (e.g., Mozambique’s political instability) while capitalizing on high-growth regions.
• Strategic Partnerships: Its collaboration with Microsoft on AI-driven tools and fiber initiatives underscores its commitment to innovation.

Final Call: A Buy on Africa’s Digitization

Vodacom is not just a telecom player—it’s a digital ecosystem builder. With Egypt and Tanzania leading the charge, M-Pesa’s transactional dominance, and a fortress balance sheet, this is a rare opportunity to invest in Africa’s future. The risks are mitigated, the tailwinds are structural, and the upside is asymmetric. This is a buy for the next decade.

Act now before the market catches up.