Vodacom has completed the transaction that gives it control of Safaricom, increasing its effective economic stake to about 55% and signalling that the group’s future growth increasingly lies beyond South Africa’s mature mobile market.
The transaction marks a major milestone for the telecommunications giant, with Safaricom moving from an associate to a fully consolidated subsidiary in Vodacom’s accounts from 1 July.
Vodacom raises growth targets
Following the completion of the deal, Vodacom has upgraded several of its medium and long-term financial targets.
The group has:
- Increased its medium-term EBITDA and operating free cash flow growth target to the early teens, up from its previous double-digit target.
- Raised its Vision 2030 group revenue ambition to more than R300 billion, from more than R200 billion.
- Reduced its dividend payout ratio to at least 65% of headline earnings, down from at least 75%, to retain more capital for future investment.
“With the completion of the Safaricom transaction, we have fundamentally reshaped the scale and growth profile of the Group,” Vodacom said in its market update.
Safaricom strengthens Vodacom’s digital ambitions
The acquisition delivers far more than additional mobile subscribers.
Safaricom brings M-Pesa, one of Africa’s most established mobile money platforms, together with its growing operations in Ethiopia through Safaricom Ethiopia.
Vodacom expects financial services to increase from around 13% to more than 22% of group service revenue, reflecting a strategic shift from traditional mobile connectivity towards digital financial services.
Dividend policy changes
The revised strategy also includes a lower dividend payout ratio.
Only a few months ago, Vodacom reaffirmed its commitment to paying out at least 75% of headline earnings and increased its total annual dividend to R7.35 per share.
The new policy reduces the minimum payout to 65%, allowing the company to retain more cash to fund expansion across Africa.
While this provides greater flexibility for future investment, it may disappoint shareholders who have traditionally viewed Vodacom as a reliable dividend-paying stock.
Regulatory challenges remain
The Safaricom transaction was delayed for several months after Kenya’s Court of Appeal issued a conservatory order.
The restriction was lifted in late June following parliamentary and regulatory scrutiny over the sale of a state asset.
The episode highlights the regulatory challenges Vodacom may continue to face as it expands its digital financial services footprint across the continent.
Africa becomes the growth story
The transaction signals a significant change in Vodacom’s long-term strategy.
Rather than relying primarily on South Africa’s mobile market, the company is positioning itself as a pan-African digital infrastructure and financial services business.
Its success will now depend not only on growing subscribers but also on expanding digital payments, financial services and technology platforms across multiple African markets.
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