Vodacom generates a large amount of revenue through offering insurance and short-term loans

Vodacom’s financial services continue to increase, and the mobile operator’s portfolio is being expanded through the VodaPay Super App.

Vodacom’s rapid expansion in financial services can be traced back to 2017, when it purchased a 34.94% indirect stake in Safaricom.

Safaricom was the leading mobile operator in Kenya at the time of purchase, with a 71% market share.

Kenya has substantially lower mobile penetration than South Africa, indicating that the country has significant development potential.

M-Pesa, a mobile phone-based money transfer business that facilitates payments and micro-financing, was another appealing aspect of the Safaricom acquisition.

Financial services are a significant new income source for mobile operators, and M-Pesa exemplifies what is possible in Africa.

M-Pesa was introduced in Kenya in 2007 and swiftly spread to neighbouring countries due to the lack of traditional banking alternatives in these areas.

Aside from M-Pesa, Vodacom has introduced a slew of other financial services, including as insurance, life and burial plans, airtime advances, business advances, and payment solutions.

Vodacom increased its financial services revenue to 11% of overall service revenue through these products in its Q3 2022 figures.

This segment’s quarter-on-quarter growth has averaged more than 5% since 2020.

Vodacom has built its VodaPay Super App in collaboration with Alibaba to further expand its banking services.

The VodaPay app combines all of Vodacom’s existing financial products with an in-app wallet and expands the platform’s eCommerce options.

The VodaPay app is now accessible in South Africa, with intentions to extend to Egypt and other Vodacom-operated nations.

Despite Vodacom’s strong concentration on its South African businesses, which provide the majority of its income, the financial services sector’s development is significantly greater in its foreign activities.

Vodacom reported a normalised 16.2% year-on-year gain in revenue in its most recent earnings release, citing financial services as its fastest-growing area.

The South African area had particularly high development in insurance goods, aided by the Vodapay app.

It speaks well for a more diverse offering across Africa, as well as revenue growth in services other than voice and data.