Vodacom is ending its long-standing reputation as one of South Africa’s most generous dividend-paying companies, choosing instead to retain more cash to fund an ambitious expansion strategy anchored on its majority acquisition of Kenya’s Safaricom and a push to become one of Africa’s biggest digital financial services providers.
The Johannesburg-listed telecoms group said it has lowered the minimum dividend payout under its policy to 65% of headline earnings from at least 75% previously, marking a major shift for a stock widely held by South African pension and retirement funds seeking reliable income. The board said the change is intended to allow Vodacom to reinvest capital at higher rates of growth and more attractive returns in its faster-growing eastern and northern African businesses, particularly following its increased stake in Safaricom.
The new policy comes after Vodacom’s completion of a R36 billion deal to acquire an additional 20% stake in Safaricom, lifting its ownership to about 55% and giving it effective control of Kenya’s largest company by market capitalisation. The transaction, which includes a 15% stake from the Kenyan government and 5% from Vodafone, was a key milestone in Vodacom’s Vision2030 strategy and is expected to strengthen its position in East Africa’s high-growth telecoms and fintech markets.
Vodacom’s chief executive said the move marks a new phase of growth for the group, supported by a more balanced portfolio, broader earnings drivers and increased exposure to some of Africa’s most attractive opportunities. On the back of the Safaricom acquisition and improved operational momentum, the company has raised its 2030 revenue goal to R300 billion ($18 billion) from R200 billion previously.
The shift also signals a broader strategic pivot under CEO Shameel Joosub, who has described the group’s ambition as becoming a leading Pan-African digital services platform rather than simply a South African mobile operator. Vodacom already operates networks in Tanzania, the Democratic Republic of Congo, Mozambique and Lesotho, and sees the Safaricom deal as a springboard for further expansion into markets such as Ethiopia, where Safaricom has launched operations in recent years.
Analysts say the dividend policy change is likely to be viewed as a pragmatic move to fund growth, but it could alter how some income-focused investors view the stock. Vodacom stressed that it remains committed to paying dividends, but at a slightly lower minimum level that allows it to accelerate investment in digital financial services, including the M-Pesa platform, and other high-return opportunities across Africa.
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