JOHANNESBURG – Vodacom Group has announced a significant reduction in its dividend policy, pivoting from generous shareholder dividends to aggressive reinvestment, as the telecommunications giant embarks on an ambitious expansion phase following its landmark acquisition of Safaricom.
In a trading update for the quarter ended 30 June 2026, Vodacom's board revealed that it had revised its dividend policy to pay out at least 65% of headline profits, down from previous levels.
This strategic shift demonstrates the company's determination to prioritize investment in network infrastructure, expansion of digital and financial services, and deleveraging over immediate shareholder returns.
Despite the lower payout ratio, Vodacom expects its dividend per share to increase for the full year 2027, supported by its current growth trajectory and current economic conditions.
Moment of truth: Safaricom integration reshapes portfolio
This quarter marked a turning point when Vodacom increased its stake in Safaricom from 35% to 55%, effective June 30, 2026.
The transaction significantly enhances the Group's scale, diversification and long-term growth prospects, adding exposure to Africa's most attractive opportunities in connectivity, digital services and financial inclusion.
“This strategically important transaction represents a major milestone in our commitment to Vision 2030,” said Vodacom Group CEO Shameel Joosub.
“We are now entering a new phase of growth, supported by a more balanced portfolio, broader revenue drivers and increased exposure to Africa's most attractive opportunities.”
Higher growth targets reflect stronger ambition
The strengthening of the portfolio has led the group to improve its medium-term guidance.
EBITDA growth target: Increased from double digits to low teens growth Operating free cash flow target: Increased from double digits to low teens Vision 2030 Group revenue target: Increased from R200 billion to R300 billion+
Financial services now account for more than 22% of the group's services revenue (up from 13%), strengthening Vodacom's leadership in African fintech.
Trading Performance Highlights for Q1 2026
Group revenue increased by 5.9% (11.4% normalized) to R42.4 billion, affected by the translation effect of the stronger rand.
Group service revenue increased by 6.3%, with normalized growth accelerating to 12.6%, on track against medium-term targets.
Non-mobile services contributed R7.8 billion, representing 22.8% of group services revenue.
mobile money milestones
Including Safaricom, Vodacom processes $547.9 billion in mobile wallet transaction value annually, representing a growth of 19.1% and highlighting the group's dominant position in financial inclusion in Africa.
Resetting the capital allocation framework for growth
“In response to this enhanced growth trajectory, the Board has revised its capital allocation framework to ensure flexibility and the right balance between investing in network infrastructure, expanding digital and financial services, progressive deleveraging and delivering attractive shareholder returns,” explained Jusab.
The revised dividend policy reflects management's confidence in the Group's growth prospects and its commitment to reinvest capital at higher rates of return.
Fixed network expansion
Vodacom has taken its anchoring strategy forward in South Africa by investing a further R800 million in Maziv to help complete the deal with Herotel.
This investment will enable Mazibu to accelerate the reach of fiber optics, drive economic development and close South Africa's digital divide.
Innovation and social impact
During the quarter, Vodacom launched Africa's first mobile money tap-to-pay solution in Tanzania, enabling more than 22 million M-Pesa customers to make seamless contactless payments.
In the Democratic Republic of the Congo, anonymized mobile data analysis is supporting Ebola preparedness efforts, and a partnership with Ethiopia is creating sustainable livelihood opportunities for vulnerable youth.
outlook
“Following the completion of the milestone transactions Maziv and Safaricom, Vodacom has developed a strategy for the future. Our focus now shifts to unlocking the full potential of our portfolio through disciplined execution, innovation and capital allocation,” Jusab concluded.
Vodacom remains well-positioned to deliver sustainable growth and attractive returns, building on Vision 2030 to bring people together for a better future.
*This article was first published in our sister publication techfinancials.co.za.
