Africa’s telecom sector turns a new page as Vodacom hikes growth forecasts The Safaricom deal is fast becoming one of the continent’s biggest business stories. The South African telecoms giant has lifted its medium-term financial targets after completing the acquisition of a controlling 55 percent stake in Kenya’s Safaricom, a deal that could transform competition, mobile banking and digital connectivity across Africa. For consumers, businesses and investors, the deal is more than just a corporate takeover. It is indicative of the growing confidence in Africa’s digital economy and the growing role of telecoms companies beyond traditional voice and data services,” said the company.
Vodacom Raises Growth Targets After Safaricom Deal
Vodacom announced more aggressive long-term growth targets after it bought an extra stake in Safaricom, increasing its holding from 35% to 55%. The acquisition will give a major boost to the company’s growth prospects and its presence across East Africa, the company said. The announcement saw Vodacom lift its Vision 2030 revenue target from more than R200 billion to over R300 billion. It also raised its medium-term targets for earnings and operating free cash flow from double-digit growth to growth in the low double digits.
Why Safaricom Is Such an Important Asset
Safaricom is one of Africa’s most successful telecoms companies and is best known for operating M-Pesa, one of the world’s largest mobile money platforms. The acquisition gives Vodacom more exposure to the fast growing digital economy in Kenya and enhances its financial services business. The move highlights the growing role of digital payments across Africa, with mobile financial services now accounting for a much larger share of Vodacom’s overall business. Industry analysts say it puts Vodacom in a good position to compete more aggressively in markets where mobile banking is becoming as important as traditional telecom services.
Strong Financial Performance Supports Expansion
The company’s improved outlook follows a strong first quarter. Vodacom reported a 6.3% rise in group service revenue, driven by strong growth in Egypt and a number of international markets. Financial services continued to grow strongly and in South Africa prepaid business also began to recover following a difficult period. The company also revised its dividend policy reducing its payout ratio to a minimum 65% of headline earnings. The company said the move would help balance returns to shareholders with future investment in network infrastructure and digital services.
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