Vodacom has lowered the floor on its dividend payout policy, cutting it to at least 65% of headline earnings from at least 75% previously, in a change disclosed alongside first-quarter trading numbers and the completion of its long-awaited Safaricom transaction.
The shift is significant for a counter widely held by South African retirement funds as an income stock, and one that Vodacom has for years marketed as offering among the highest payout ratios on the JSE.
The 75% policy was reaffirmed as recently as the group’s 2026 annual results (PDF) in May, when the board declared a final dividend of R4.05/share and a total for the year of R7.35, up 18.5% — a payout the announcement described as “consistent with our dividend policy of paying out at least 75% of headline earnings”.
Vodacom said its board reviewed the capital allocation framework to balance investment in network infrastructure, the scaling of digital and financial services, progressive deleveraging, and shareholder returns.
The group moved to soften the news by committing to dividend growth in the current financial year. “At this revised payout level, we expect to grow the dividend per share for FY2027, based on our current growth trajectory and the prevailing economic conditions,” said group CEO Shameel Joosub.
The policy change comes alongside a step-change in the group’s structure. Vodacom lifted its stake in Kenya’s Safaricom from 35% to 55%, effective 30 June, bringing the East African mobile operator onto its balance sheet as a consolidated subsidiary.
Targets upgraded
On the back of that, Vodacom upgraded its medium-term Ebitda (earnings before interest, tax, depreciation and amortisation) and operating free cash flow growth targets from double digit to “early teens” growth, and raised its Vision 2030 group revenue ambition from more than R200-billion to more than R300-billion.
Financial services will jump from 13% to more than 22% of group service revenue as a result – a material reweighting of the business away from connectivity and towards fintech.
“We are now entering a new phase of growth, supported by a more balanced portfolio, broader earnings drivers and increased exposure to some of Africa’s most attractive opportunities,” Joosub said.
Read: Vodacom takes the reins at Safaricom in R35-billion deal
Group revenue for the quarter ended 30 June rose 5.9% to R42.4-billion, with service revenue up 6.3% to R34.3-billion. On a normalised basis – stripping out currency translation effects from a stronger rand – service revenue grew 12.6%.
South Africa remained the weakest link, with service revenue up just 2%, below inflation and down from the 2.8% growth Vodacom reported for the fourth quarter of FY2026. The one bright spot was prepaid, which Vodacom said returned to growth after a run of pressure, which it attributed to simplified propositions and improved value.
Egypt again did the heavy lifting, growing service revenue 32.8% in local currency, with financial services revenue there up 73%. The international business grew service revenue 4.1% in rand terms, or 14% normalised, with Tanzania, the DRC and Lesotho cited as the main contributors.
Group financial services revenue rose 17.8% to R4.5-billion, or 27% on a normalised basis. Including Safaricom, Vodacom said it processed US$547.9-billion in mobile money transaction value over the past 12 months, up 19.1%.
Beyond-mobile services – financial services, fixed, digital and the internet of things – contributed R7.8-billion, or 22.8% of group service revenue, against a Vision 2030 target approaching 30%.
More money into Maziv
Vodacom also disclosed that it invested a further R800-million into fibre group Maziv during the quarter to support completion of the Herotel transaction, deepening its exposure to South Africa’s consolidating fibre market.
“We believe that Maziv is well positioned to accelerate fibre reach in South Africa, fostering economic development and helping bridge South Africa’s digital divide,” Joosub said. – © 2026 NewsCentral Media
- Subscribe to TechCentral’s daily newsletter
- Get breaking news alerts on WhatsApp
