Pepkor Holdings’ cellular business has pivoted decisively from selling phones to financing them, the JSE-listed retailer’s interim results showed on Tuesday, with its smartphone rental book swelling to R2.6-billion in the six months to 31 March 2026 even as overall handset volumes plateaued.

The group’s FoneYam smartphone rental product activated 1.3 million new accounts during the half – growth of 32% from the comparable period – taking its active customer base to 2.4 million. The rental book has grown from R1.7-billion a year ago, a 53% expansion in 12 months.

Total handset sales across Pepkor’s brands, by contrast, came in at roughly 6.7 million units for the six months – broadly flat against the 6.8 million recorded a year earlier, when the group cited GfK data showing it sold eight of every 10 prepaid handsets in South Africa. That market share figure is not included in this set of results.

At Pep, 4.9 million handsets were sold (up 4.1%) and 750 000 FoneYam accounts were activated (up 42%). At Ackermans, 1.6 million handsets were sold (up 6.2%) and 531 000 FoneYam accounts were activated (up 14%).

The Speciality division, which includes Tekkie Town, Dunns, Code, Refinery and the recently acquired Legit, Swagga, Style and Boardmans brands, sold 225 000 handsets (up 42%), including 35 000 FoneYam activations following the product’s launch into the segment during the period.

Pepkor’s newly disaggregated financial services segment – which includes FoneYam alongside Capfin (lending), Abacus (insurance) and PlusB, the group’s prospective bank – grew revenue by 41.6% to R3-billion in the half, with operating profit up 63.4% to R691-million. Pepkor said profits doubled in the cellular rental and insurance businesses combined.

Recurring revenue

The recurring revenue stream is also significant. Pepkor’s active cellular Sim base now exceeds 30 million, and ongoing revenue earned from that base grew 13.4% to R1.1-billion in the half. The take-up rate of a second FoneYam rental by customers after completing their first has exceeded expectations, the group said, signalling that customer lifetime value on the product is running ahead of internal models.

The scale of Pepkor’s cellular operations sits awkwardly alongside the conventional view of the South African mobile market, which is typically focused on the operators, Vodacom, MTN, Cell C and Telkom. Pepkor is not a network operator and does not appear in the most-cited market share data – but its 6 657-store physical footprint, deep customer credit infrastructure and the financing layer FoneYam provides give it a structurally different position from any of the operators’ retail channels.

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The pivot is also a counter-cyclical bet on smartphone affordability. South Africa’s electronics retail market has been pressured by rand weakness and AI-driven component price inflation. By financing handsets over multi-month rental periods rather than selling them outright, FoneYam absorbs some of the affordability shock for lower-income consumers – and converts what was a one-off device sale into a multi-month income stream.

Pepkor described its retail footprint, customer acquisition capability and financial services platform as the basis for its planned expansion into banking through PlusB. The group submitted its section 16 application to the Prudential Authority at the end of March 2026 – the final regulatory step before it can be officially registered as a bank. – © 2026 NewsCentral Media