Prepaid Segment Slump Weighs on Vodacom South Africa’s Financial Performance
While Vodacom Group’s international operations provided a significant lift to its interim results for the six months ending September 2025, the story in its home market of South Africa was far more complex. The local operation delivered a mixed financial report, with growth in certain areas being dragged down by a persistent downturn in its crucial prepaid business.
A Tale of Two Halves: Service Revenue Growth Cools
Vodacom South Africa managed a modest service revenue increase of 2.2%, reaching R31.7-billion. However, this headline figure masks a concerning trend. The growth rate slowed dramatically in the second quarter, falling to just 1.4% compared to 3% in the first quarter. This deceleration was primarily driven by mounting pressure in the prepaid segment, which offset gains made in the contract and “beyond-mobile” service portfolios.
A key profitability metric, Ebitda (earnings before interest, tax, depreciation, and amortization), declined by 5.3%. The company attributed this drop to softer overall revenue and a once-off cost item, widely believed to be the final settlement paid to Nkosana Makate for the iconic “Please Call Me” service.
Contract Segment Holds Steady as Prepaid Falters
The mobile contract segment continued to be the financial bedrock for the operator. Revenue here grew by 3.7% to R12.5-billion, a performance bolstered by a price adjustment implemented in March 2025. The operator added 21,000 contract customers, bringing its total base to 6.9 million, and saw the average revenue per user (Arpu) rise 2.6% to R314.
Prepaid Pressure Intensifies
In stark contrast, the prepaid business contracted. Revenue slipped 1.6% to R13.2-billion as South African consumers grappled with persistent economic pressure and intensified market competition. The situation worsened as the period progressed, with prepaid revenue falling 2.9% in the second quarter after a marginal 0.4% decline in the first.
Vodacom’s prepaid customer base shrank by 7.4% to 39.2 million, a result of a continued clean-up of inactive subscribers from earlier quarters. On a more positive note, the remaining active user base showed stronger engagement. Prepaid Arpu rose 3.6% to R57 in the second quarter, indicating that those who remain are spending more.
Data Surge and “Beyond-Mobile” Gains
Despite the prepaid challenges, data consumption soared. Overall data traffic surged by an impressive 31.1%, fueled by wider smartphone adoption, new prepaid LTE offerings, and sustained network investment. The number of smart devices on the network increased by 7.8% to 34.3 million, with 4G and 5G devices jumping 11.1% to 26.3 million. The average data usage per smart device rose by nearly a quarter to 5.9GB per month.
This translated into a 5.8% increase in prepaid data revenue, which reached R7.2-billion. Meanwhile, Vodacom’s strategic “beyond-mobile” portfolio—encompassing financial services, fixed connectivity, and Internet of Things (IoT) solutions—grew by 5.6% to R5.8-billion, now accounting for 18.3% of total service revenue.
Financial services revenue specifically grew 6.3% to R1.8-billion, led by insurance and payment products. The Vodacom Business unit also performed well, posting a 5.1% service revenue rise to R8.7-billion, buoyed by a 27.1% surge in cloud, hosting, and security services.
Sustained Investment in Network and Infrastructure
Underpinning these results is a continued commitment to capital expenditure. Vodacom invested R4.1-billion in its South African network during the half-year to strengthen resilience, deploy new spectrum, and modernise IT platforms. The company expects its full-year capital expenditure to land between R11.5-billion and R12-billion.
Source: 2025 NewsCentral Media