Vodacom Lowers Dividend Payout, Boosts 2030 Revenue Target to 300 Billion Rand

What Changed and Why

Vodacom Group Ltd. cut its planned dividend payout while increasing its medium-term targets for revenue, profit, and cash generation, aiming to free up funds for investment in fast-growing markets in East and North Africa.

A company spokesperson said the board's intention is "to reinvest capital at higher rates of growth and attractive returns," according to a Monday statement.

"At this revised payout level, we expect to grow the dividend per share for fiscal 2027, based on our current growth trajectory and the prevailing economic conditions," said the company, which is headquartered in Midrand, South Africa, and majority-controlled by the UK's Vodafone Group Plc.

For the three months through June 30, Vodacom reported a 6% revenue rise to 42.4 billion rand, matching the Bloomberg analyst consensus.

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Driven by this performance, Vodacom lifted its 2030 revenue target to 300 billion rand ($18 billion), up from an earlier forecast of 200 billion rand.

Following its acquisition of a majority stake in Safaricom Plc, East Africa's largest mobile operator, Vodacom states that it has entered a new phase of growth with a more diverse portfolio, broader earnings drivers, and better access to some of the continent's most attractive opportunities.

Vodacom's decision to lower its payout ratio reflects a strategic shift toward funding expansion in higher-growth regions. The company, majority-owned by Vodafone, has historically paid a high dividend, but the Safaricom acquisition has opened new opportunities in mobile money and data services across East Africa. This reinvestment strategy aims to generate higher returns for shareholders over the long term.

Strategic Context

Last year's acquisition of Safaricom has greatly expanded Vodacom's revenue sources, bringing in markets like Kenya, Ethiopia, and others across East Africa. The group now has stronger exposure to mobile money, data services, and enterprise solutions in regions with youthful populations and rising smartphone penetration. This shift allows Vodacom to reduce its reliance on the mature South African market, where growth has slowed. The company's majority shareholder, Vodafone, supports the strategy of reinvesting cash flows into higher-return opportunities across the continent.

The move into East Africa also brings Vodacom a leading position in mobile financial services through M-Pesa, a widely used digital payments platform. This expands the group's addressable market beyond traditional telecoms into financial inclusion, which is a fast-growing segment on the continent. By leveraging Safaricom's established network and customer base, Vodacom can scale its offerings in data and enterprise solutions more efficiently. The addition of Ethiopia's liberalizing telecom market, where smartphone adoption is low but rising, further strengthens the group's growth runway.

The dividend cut supports this strategy by freeing up cash for network expansion and digital services in these high-potential regions. With M-Pesa's large user base and Ethiopia's untapped subscriber pool, Vodacom aims to capture rising data consumption and mobile money volumes, which are expected to drive the upgraded revenue and profit targets.

The Safaricom deal also gave Vodacom ownership of M-Pesa, which has tens of millions of users across multiple countries and generates substantial transaction volumes. Ethiopia's low mobile penetration offers a greenfield opportunity for subscriber growth, and Vodacom's network investments there are intended to capture the continent's digital transformation.

As a result, Vodacom has lifted its medium-term forecasts for EBITDA and operating free cash flow, targeting early-teens percentage growth compared with the previous double-digit goals.

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