Vodafone Egypt, a subsidiary of the Vodacom Group, has strengthened its telecommunications foothold in North Africa by securing a 5G license from Egypt’s Ministry of Communications and Information Technology. This strategic $150 million investment not only positions Vodafone Egypt as a 5G leader but also extends its existing spectrum rights by five years, until 2039, for an additional $17 million. These fees, expected to be paid during the second half of the current financial year, align with Vodacom Group’s mid-term financial results, showcasing an upward trajectory in revenue and expanding customer base across its various markets.
Vodafone Egypt’s Financial Performance in 2024
In the latest interim report for the six months ending September 30, 2024, Vodafone Egypt’s performance has highlighted the significance of the Egyptian market within the Vodacom portfolio, which also spans operations across South Africa, Kenya, Tanzania, and several other African nations. With service revenue reaching R13.0 billion (approximately $680 million USD), Vodafone Egypt contributed a substantial 22.1% to the Vodacom Group’s total service revenue. In local currency terms, the service revenue rose 44.1% year-over-year, with a further acceleration in growth to 44.4% in the second quarter alone.
Growth Factors: Customer Engagement and Expansion of Vodafone Cash
Vodacom Group CEO Shameel Joosub attributes this growth to robust customer engagement in connectivity services and exceptional expansion in Vodafone Cash, Egypt’s leading financial service platform that builds on M-PESA’s technology. Vodafone Cash, offering peer-to-peer transfers, payments, savings options, and microloans, serves around 3 million users and continues to gain traction, reflected in a 94.5% revenue growth in local currency terms. This platform’s growth has been further fueled by a 43.1% increase in Vodafone Cash users, reaching nearly 9.6 million customers.
Egypt’s Milestone in Mobile Connectivity and Revenue per User Growth
With 50 million mobile customers, Vodafone Egypt celebrated a significant milestone this year. Average revenue per user (ARPU) surged by 34.6%, driven by data traffic growth of 32.0%, supported by an increase in the number of data customers by 9.6% to approximately 30.9 million. Furthermore, smartphones on the network increased by 10.8%, fueling an impressive 46.9% rise in mobile data revenue during the second quarter.
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Financial Services Revenue: A Key Contributor to Vodacom’s Growth
Financial services revenue, largely driven by Vodafone Cash, reached R1.0 billion (around $52 million USD) in Egypt, accounting for 7.6% of Vodafone Egypt’s service revenue. In terms of earnings, Egypt contributed R6.2 billion to the Vodacom Group’s EBITDA (earnings before interest, taxes, depreciation, and amortization), equating to 23.4% of the group’s total EBITDA. Cost management was also a standout, with Vodafone Egypt achieving an EBITDA margin of 43.4%, marking a 1.5-percentage point increase from the prior period, further boosted to 45.1% when excluding foreign exchange trading losses. This success reflects strong cost control in an inflationary environment, with operating profit growing by 78.1% in local currency and net income up by 75.1%.
Capital Investments and 5G Expansion
In addition to the new 5G license, Vodafone Egypt invested $125 million in capital expenditure over the period, reaching a capital intensity ratio of 15.7%. According to Joosub, “We continued to deploy the 2,600 MHz spectrum and expand our network by rolling out new sites across Egypt.” This 5G licensing commitment, coupled with spectrum investments, positions Vodafone Egypt to continue delivering high-speed connectivity and meet the increasing demand for mobile data services in one of Africa’s most dynamic telecommunications markets.
Competitive Landscape and Market Share
Holding a 43% revenue market share, Vodafone Egypt is a dominant force in the Egyptian telecom market, servicing approximately 43 million consumer and enterprise customers. This market presence is amplified by partnerships with other major players in Egypt, such as Telecom Egypt, Orange, Etisalat Egypt, and technology provider Ericsson, all of which contribute to the vibrant North African telecom sector.
Conclusion: A Strategic Move Strengthening Vodafone Egypt’s Leadership
Vodafone Egypt’s latest achievements reflect the Vodacom Group’s long-term strategy to drive digital transformation and expand advanced connectivity in key African markets. By securing a 5G license, extending its spectrum rights, and growing customer engagement through services like Vodafone Cash, Vodafone Egypt is positioned to lead in Egypt’s evolving telecom landscape. This substantial investment underscores the Vodacom Group’s commitment to strengthening its North African footprint while enhancing service offerings for millions of customers.
