Strong Start to the Financial Year

Vodafone has raised its financial forecast due to the successful integration of Safaricom, which is one of the largest telecommunications companies in Africa. This new financial forecast is due to the positive results obtained during the first quarter and the expansion of the company’s African operations through the holding position of Vodacom in the Kenyan company.

For the financial year that will end in March 2027, Vodafone is forecasting core earnings between €13.0 billion and €13.3 billion, up from its previous forecasts. Vodafone also reiterated its guidance for free cash flow at between €2.6 billion and €2.9 billion.

Safaricom Acquisition Drives Growth

This optimism is due to Vodacom taking up an extra 20% share in Safaricom, raising its stake in the company to 55%, thus controlling the Kenyan telecom operator and enabling Vodafone to consolidate Safaricom in its accounting books.

It will help expand Vodafone's footprint in East Africa and its business in digital financial services. The M-Pesa mobile money service provider Safaricom has been playing a crucial role in the future success of Vodafone.

Revenue Growth Across African Markets

Service revenue for organic revenue rose by 5.2% in Q1 for Vodafone. Customer demand remained high in Africa and Turkey for Vodafone. In addition, there were cost reductions that made Vodafone's adjusted core earnings go up by 6.2% from the first quarter in the previous year.

However, Vodacom had managed to grow its service revenue by 6.3%, amounting to 34.3 billion rand in Q1. This was largely because of Egypt, besides other operations in Africa. South Africa managed to grow its service revenue thanks to prepaid users.

Higher Long-Term Ambitions

According to Vodacom CEO Shameel Joosub, the Safaricom deal was a big achievement as it will boost the future growth potential of the firm. Financial services now make up more than 22% of group service revenue, having been 13% before the deal.

At the same time, the revenue target under Vision 2030 was increased from 300 billion rand to over 300 billion rand. The firm also reduced the dividend payout ratio from 75% to not less than 65%.

Positive Outlook for Vodafone

Vodafone chief executive officer Margherita Della Valle stated that the firm is off to a good start for the fiscal year, underpinned by robust business performance in multiple countries. Indeed, analysts were anticipating improved guidance from the firm following the acquisition of Safaricom, and the new guidance was in line with market expectations.

Having Safaricom under its belt, Vodafone thinks that its increased presence in Africa and its growing digital business will drive earnings through the year.