With the major transformative acquisitions now largely complete, the investment case for telecoms giant Vodacom has shifted from dealmaking to delivery. The group must now show that its broader geographic exposure, growing financial services operations and expanded fixed connectivity footprint can translate into sustained growth in earnings, cash flow and dividends.
The share is up 13% over a year, reflecting a trailing earnings multiple of 15 and a dividend yield edging closer to 5%. The market appears to be banking on solid rather than spectacular prospects.
Shareholders will take note that Vodacom CEO Shameel Joosub was dismissive last week of renewed discussion about establishing a wireless open-access network (WOAN) in South Africa. The proposed WOAN would be a wholesale-only national mobile network allocated spectrum and required to sell capacity to retail operators and service providers, ostensibly lowering barriers to entry by allowing participants to offer mobile services without building complete networks of their own.
“In terms of the wholesale access network, there are some rumblings. But to be honest, it still doesn’t make any sense,” Joosub told investors after Vodacom’s first-quarter update. “It’s a nonstarter; I don’t think it goes anywhere. It was rejected in parliament a few years ago and if it gets back there, it will be rejected again because it hasn’t evolved at all. The arguments are still exactly the same.”
His objection centres on the unresolved practicalities of the model: how a new wholesale network would coexist with infrastructure already built by Vodacom, MTN and other operators; how existing spectrum and network assets would be treated; and whether the proposed operator could attract sufficient capital and wholesale customers to become commercially viable.
Joosub was equally forthright about Starlink’s continued absence from South Africa, despite Vodacom already having an Africa-wide strategic partnership with the satellite operator. That agreement allows Vodacom to use Starlink for mobile network backhaul and to resell its equipment and connectivity services in African markets where the necessary regulatory approvals are in place.
“Starlink, simply put, doesn’t want to comply with the local regulations and therefore cannot be licensed,” Joosub said. “I think once it complies, it will become available in South Africa. Alternatively, it needs to work through the telcos and use the telco licences … you would have noticed Amazon Leo announcing that it will launch services with Herotel.”
Herotel is now part of Maziv, the owner of Vumatel and Dark Fibre Africa, in which Vodacom acquired a 30% interest in December 2025. The transaction gives Vodacom substantial indirect exposure to South Africa’s fibre infrastructure, broadens its product offering beyond mobile connectivity and strengthens its position in wholesale and retail fixed broadband. Maziv completed its acquisition of Herotel in May 2026, supported by a further R800m investment from Vodacom, taking its fibre footprint to almost 3-million homes.
These transactions form part of a broader reshaping of Vodacom. Other major moves include increasing its effective holding in Kenya’s Safaricom from about 35% to a controlling 55% and acquiring a 55% interest in Vodafone Egypt in December 2022.
The result is a substantially more diversified group. After excluding minority interests and assuming that Vodacom’s new 55% Safaricom holding had been applied for the full 2026 year, South Africa would contribute about 48.5% of profits, Safaricom 22%, Egypt 20% and the international operations about 9.5%.
That geographic shift matters because rising data consumption is generally easier to monetise in markets outside South Africa. Joosub noted that Egypt, Tanzania and Ethiopia have regulated pricing or price floors, limiting how aggressively operators can undercut one another and helping preserve the economics of network investment.
Vodacom and its competitors are still absorbing the effects of prepaid price reductions introduced in South Africa towards the end of 2025. MTN moved first, prompting Vodacom to respond to ensure that its offers remained competitive.
The cheaper and simpler propositions appear to be gaining traction. South African prepaid data revenue rose 9.4% in the June quarter, while total prepaid revenue returned to modest growth of 0.4%. However, the increase in data revenue remained far below the 38.8% rise in data traffic, indicating that the effective revenue earned per gigabyte continues to decline.
Importantly, the price war has not intensified during 2026. “We haven’t seen any aggressive responses,” Joosub said. “Pricing is more or less stable, and I think we’re all dealing with the changes made last year.”
Voice revenue remains a structural drag as smartphone users increasingly substitute WhatsApp and other data-based applications for conventional calls and messages. South African prepaid voice revenue declined 14% during the quarter. The consolation is that voice now accounts for only 27.5% of prepaid revenue and 11% of South African service revenue. As Joosub observed, “the number is becoming smaller”.
Beyond-mobile service revenue — including M-Pesa, Vodafone Cash, insurance, lending and merchant services — grew 27% on a normalised basis and, at 22.8% of group service revenue, is already substantial enough to offset some of that pressure.
VodaPay is also emerging as a meaningful distribution and customer engagement channel. “More than 10% of airtime now goes through the app,” Joosub said. Greater adoption should also give Vodacom deeper insight into customer behaviour and improve its ability to cross-sell insurance and other financial services products.
Safaricom and Egypt, together with the broader financial services portfolio, are now Vodacom’s principal growth engines. South Africa remains the stable cash-generative base, while Maziv provides additional diversification through fibre, wholesale infrastructure and, potentially, satellite broadband through Herotel’s relationship with Amazon Leo.
The increased Safaricom stake has, however, raised group leverage. Vodacom reduced its minimum dividend payout ratio from 75% to 65% to retain more cash for debt reduction and investment. Even so, management expects the dividend per share to increase in the 2027 financial year, supported by stronger earnings growth from the enlarged portfolio.