Business

Mobile Money: Vodacom has announced a deal to acquire an additional 20% of Kenyan associate Safaricom. (Credit: Fiona Graham)

Mobile operators, especially mature ones that have been operating for decades, are not meant to be growth businesses, and neither are their stocks. Typically, these are utility type companies that tend to grow their toplines and profits very, very, steadily. While capital expenditure demands are high because they need to keep investing in their networks, this is largely debt-funded, which means these mature operators produce a lot of cash. This also means that most are great dividend payers.

Something has changed at Vodacom, though. Gone are the days of anaemic single-digit growth rates. Growth at Vodacom is now firmly in the teens. Revenue is tracking that of subscribers, up 12% over the last financial year, with underlying profits, on an EBITDA basis, up by 14%. And the group sees double-digit EBITDA growth for at least the next four years.