Finance Ghost: Can Vodacom deliver on its targets?

Vodacom’s share price closed more than 7% higher on 10 November 2026, the day that it released results for the six months to September 2026.(1) Many factors can impact a share price on any particular day, but a move like this on the day of earnings could be interpreted as a signal that the market liked what it saw in the numbers.

With reported service revenue up 29.4% and HEPS increasing 25.7%, strong growth rates are at play in these results.

But other metrics are less flattering, like the interim dividend per share increasing only 7.6% due to a revised payout policy. There’s also been an increase in the net debt to EBITDA ratio based on recent corporate activity.(2)

You’ll also find the words “pro-forma” all over the place. What could that mean?

Let’s dig deeper into an important set of numbers for Vodacom.

“One of our strongest performances”

The very first slide in the investor presentation makes it obvious that management is happy with these numbers. The company calls it “one of our strongest performances” and references an upgraded medium-term revenue target as part of the broader Vision 2030 ambitions.

The company is now aiming to reach over R300 billion in revenue by FY30, a substantial increase from the previous target of R200 billion.

Underneath all this, one of the most important things to understand is that Vodacom’s business in the rest of Africa has become an increasingly important part of the group.

MTN might get a lot of credit from investors for its reach on the continent, but Vodacom has also made significant strides in this regard. 61% of Vodacom group revenue is now coming from outside South Africa on a pro-forma basis.(3)

The words “pro-forma basis” come up a lot in the announcement, so it’s worth explaining what they mean. Vodacom’s methodology adjusts for Safaricom as though it were consolidated for the full period. This isn’t the way the accounting actually works, as Vodacom only increased from a minority stake to a controlling stake in June 2026.

The other important element of the pro-forma numbers is that they are based on constant currency revenue. This strips out the impact of forex movements in any particular period.

In other words, the pro-forma numbers are designed to give readers an idea of the run-rate of the current business, not just the reported numbers based on how Vodacom has looked over six months.

But will the courts see it that way?

There’s an unusual risk Vodacom faces. The High Court in Kenya has declared the government’s sale of a 15% stake in Safaricom to Vodacom null and void, due to a lack of proper public participation. The status quo is being maintained (i.e., Vodacom’s Kenya subsidiary is still the registered holder of the shares) while the matter goes to appeal, but the outcome is currently uncertain.(4)

This puts the company in a very awkward position, with Vodacom’s reports trying to explain the performance of an asset with uncertain future ownership and accounting policies. If the appeal doesn’t go Vodacom’s way, it could affect its ability to retain control of Safaricom. Other than the accounting considerations, this also has strategic implications for the group.

This is a complex matter.

Unpacking the geographical mix

Particularly with the overhang at Safaricom, it’s very important to understand how Vodacom’s group performance is actually generated. There are many moving parts here across types of revenue and geographical exposure.

On a pro-forma basis over the past twelve months (note the period here — not six months), South Africa remains the highest revenue contributor at 39% of group revenue. Next up is Safaricom at 25%, Egypt at 21% and then the International Businesses (basically everything else Vodacom has in Africa) at 15%.

On the EBITDA line and using a similar pro-forma basis over 12 months, South Africa’s 34% contribution is only slightly higher than the 33% from Safaricom. Egypt contributed 21% and the International Businesses contributed 12%.

The mix tells us that Safaricom is currently operating at a higher EBITDA margin than the group average. Again, it’s very important to remember that this mix could change significantly depending on the outcome of the appeal.

Moving beyond mobile

We need to do some more jargon busting now.

Vodacom’s “beyond mobile” segment comprises financial services, digital services, internet of things and fixed internet solutions. The other bucket, core mobile, includes the typical voice and mobile data services.

Beyond mobile contributed 27.4% of group revenue on a pro-forma basis over six months, so this is only slightly more than a quarter of the group’s activities.

As tempting as it may be to immediately categorise these buckets as high-growth vs low-growth, it’s nowhere near that simple.

For example, although beyond mobile grew 21.2% on a pro-forma basis over six months, this was slightly below the 22.9% growth in prepaid data revenue. Smartphone penetration is one of the important drivers of prepaid data usage, so it would be incorrect to see the prepaid business as a legacy operation.

The same can’t be said for prepaid voice revenue; the slowest-growing category at just 3.8% growth on a pro-forma basis over six months. The other notable category inside core mobile is contract revenue, up 8.7% on the same basis.

Is South Africa a mature market?

Vodacom’s home market is typically seen as mature from a telco perspective. Revenue growth of just 2.1% in the six-month period would support that view.

Core mobile services contributed 81.2% of revenue in South Africa for this period, with the telcos finding it difficult to make meaningful progress in financial services offerings (part of beyond mobile) in a country where banks are everywhere. The beyond mobile portfolio grew revenue 4.8%, ahead of the 1.9% growth in total service revenue, but barely above inflation in South Africa.

The surprise came on the EBITDA line, where a 10.5% increase for the period was particularly unusual. Vodacom notes that the growth rate was impacted by once-offs in the prior year, so extrapolating this growth would be unwise. Still, Vodacom reported its highest EBITDA margin (37.4%) since FY23 in the local market.

A similar shape in Egypt, but a much higher growth rate

The Egyptian business has a similar shape to South Africa in terms of the split between core mobile and beyond mobile services.

Despite 81% of interim revenue being in core mobile, Egypt reported a strong growth rate of 37.9% in the latest period (in local currency). Within that number, the beyond mobile services grew 49.7%.

EBITDA growth of 31.3% for the interim period tells us that EBITDA margin has come under some pressure though, which isn’t unusual in a market with rapid expansion opportunities.

Translated to rands, the performance in Egypt is  21.2% revenue growth and 15.5% EBITDA growth in this period.

Safaricom is far more reliant on financial services

Safaricom operates in East Africa, where extensive investment has gone into financial services (like M-Pesa) over the years. This is why the core mobile offering is only 50.6% of revenue on a pro-forma basis for the six months, while beyond mobile sits at 49.4%.

On a pro-forma basis, Safaricom’s interim revenue increased 14.2% in constant currency, with beyond mobile growing at a similar rate. EBITDA increased 27.5%, so EBITDA margin expanded significantly. One of the contributing factors was a 96.5% reduction in losses in Ethiopia as that business has continued to scale.

International business can be a useful source of growth

The international business shouldn’t just be glossed over. For context, this segment generated R5.9 billion in revenue for the period from beyond mobile services, higher than Egypt at R4 billion. International is a lot smaller in core mobile services, but it’s still a relevant growth engine for the group.

Revenue grew 12.2% on a normalised (i.e., constant currency) basis for the period. EBITDA increased 15.9%. That’s an encouraging story for margins.

Once translated to rands, the growth was far lower. Revenue increased 2.4% and EBITDA was up 7.5% for the period.

What about the balance sheet?

The Safaricom transaction has been the major driver behind an increase in the net debt to EBITDA ratio from 0.9x to 1.6x on a reported basis, or 1.3x on a pro-forma basis. If we look at the income statement, there’s a 64.5% jump in net finance charges that Vodacom attributes mainly to the Safaricom deal.

The debt for the transaction comprises term loans and preference shares. It’s unclear what an unsuccessful appeal would mean for a potential unwind of some of the debt. Even if Vodacom’s appeal is successful, it will be important to watch how the net debt ratios develop.

The pressure on the balance sheet is visible in the dividend payout ratio, which has decreased from 75% of headline earnings to 65%. The Safaricom deal and other significant steps taken in Africa are a sign that Vodacom is chasing growth, not just cash to pay dividends.

Disclosure: The Finance Ghost does not hold a position in Vodacom at the time of writing. BROKSTOCK, its employees, representatives or related parties may hold positions in the financial instruments discussed.

(1)     Based on closing price on 10 November 2026

(2)     Financial metrics sourced from Vodacom results for the six months to September 2026

(3)     Calculation based on pro-forma results assuming Safaricom was consolidated from 1 April 2025. Calculation methodology and outcome as disclosed by Vodacom in the results presentation.

(4)     Vodacom confident of overturning Kenya ruling as Safaricom boosts profit 

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