Vodacom’s Half-Year Profit Surges 33% as African Operations Offset South African Weakness

South African mobile telecoms operator Vodacom Group Ltd. reported a strong first-half performance on Monday, posting a nearly 33 percent jump in headline earnings per share (HEPS), buoyed by growth across its African markets even as profits in its home country slipped due to a major one-off cost.

The company, which is majority owned by Britain’s Vodafone Group Plc, said HEPS rose to 467 cents in the six months ended September 30, compared to 353 cents in the same period a year earlier. The figure includes a one-off payment to former employee Kenneth Makate, settling a 17-year legal dispute over Vodacom’s “Please Call Me” service, which allows users to send free call-back messages. The settlement amount was not disclosed, though SBG Securities estimated it at roughly 500 million rand ($28.9 million) based on Vodacom’s revised earnings outlook.

Vodacom, South Africa’s largest mobile operator by subscribers, had initially projected even stronger HEPS growth before revising its forecast last week following the settlement. Despite that, the company delivered a robust performance, with operating profit climbing 25.5 percent to 20.2 billion rand, thanks to higher earnings in all markets outside South Africa.

South Africa Struggles Amid Cost Pressures

The company’s home market, however, remained a weak spot. Operating profit in South Africa dropped 11 percent to 8.8 billion rand, reflecting both the impact of the legal payout and ongoing margin pressure. While service revenue in South Africa inched up 2.2 percent, this was largely driven by growth in contract and non-mobile services. Prepaid revenue continued to decline as consumers battled a tougher economic environment and rising living costs.

“You’ve got a consumer that’s more under pressure, but you’ve also got a lot more competitive competition in the prepaid segment,” Group CEO Shameel Joosub told Reuters.

To stabilize prepaid growth, Vodacom is rolling out larger data bundles at discounted rates and more competitive smartphone deals to attract and retain budget-conscious users. Joosub said the company is focused on “creating more value for customers” through bundled offers that combine mobile, data, and digital financial services.

Africa Drives Group Growth

Across the continent, Vodacom’s other markets provided the engine for profit expansion. Group service revenue surged 12.2 percent to 65.8 billion rand, led by continued momentum in Egypt, which has emerged as Vodacom’s fastest-growing market since it completed its acquisition of a controlling stake in Vodafone Egypt in 2022.

The company also recorded improved results from Kenya’s Safaricom Plc, in which it holds a significant stake, as well as from its operations in Tanzania, Mozambique, and the Democratic Republic of Congo. These markets benefited from rising mobile data usage and increased demand for digital financial services through M-Pesa, Africa’s leading mobile money platform jointly operated with Safaricom.

Egypt’s strong performance was particularly encouraging as the integration of Vodafone Egypt had exceeded expectations, delivering double-digit growth.

Balancing Growth and Investment

Vodacom’s expansion across Africa has come with growing capital commitments, especially in network modernization and 5G rollout. The company has been ramping up investment in high-speed connectivity and digital services to capture rising data demand in emerging markets.

Analysts say the strong performance outside South Africa highlights the group’s geographic diversification and resilience in a challenging macroeconomic environment marked by currency fluctuations and regulatory hurdles.

Still, the company faces persistent pressure in its home market, where economic stagnation, load-shedding, and intense price competition have limited growth prospects. The company acknowledged these headwinds but reiterates its commitment to continue to invest in its South African network to strengthen coverage and reliability.

As of early Monday trading, Vodacom’s shares were little changed on the Johannesburg Stock Exchange, with investors digesting the impact of the one-off payment against the backdrop of strong regional results.

The company’s first-half performance reinforces its strategy of betting on Africa’s high-growth markets to offset domestic headwinds — a balancing act that continues to define Vodacom’s evolution as one of the continent’s largest and most diversified telecom groups.