Africa: Mobile money becomes lifeline as telecoms thrive in Covid-19 era

Mobile money and data have emerged as the lifeline in revenue growth for African-focused telecoms operators Vodacom Group and Airtel Africa across markets characterised by stiff competition and challenging regulatory regimes.

The two telcos this week released full year results for the year ended March 31 that show impressive growth in mobile money and data earnings amidst near flat increase in voice revenue.

This year, the companies are apprehensive of the impact of the Covid-19, something that has forced Airtel Africa to extend the maturity of $254 million of debt facilities by an average of 18 months in order to improve its liquidity.

South Africa-based Vodacom rode on its investment in Kenya’s Safaricom, which is Africa’s second biggest telco by market capitalisation, to grow its revenues by 4.8 per cent to $4.9 billion from $4.7 billion posted the previous year as the M-Pesa mobile money continued to gain traction in more markets.

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The company, which saw its net profit increase by7.2 per cent to $905.4 million from $844.9 million, said that its investment in Safaricom delivered a 30.4 per cent boost in profits with growth bolstered by currency factors and inclusion of the new M-Pesa joint venture.

“An additional four million customers and increased demand for data and M-Pesa services contributed to a 12.5 per cent increase in service revenue across our operations,” said Shameel Joosub, Vodacom Group chief executive.

He added the company currently boasts of 40 million customers transacting on M-Pesa across all its operations generating total revenue of $881.3 million and growing at 22 per cent a year.

Vodacom and Safaricom acquired the M-Pesa brand, support and product development services from Vodafone through a newly created joint venture with the deal intended to accelerate M-Pesa’s growth in Africa by giving the two telcos full control of the brand, product development and support services, as well as the opportunity to more closely align product roadmaps to be deployed across all markets.

On its part, Airtel Africa saw its revenues for the year increase by 11.2 per cent to $3.4 billion from $3 billion last year driven by 36.1 per rise in data revenue to $930 million from $683 million and 32.9 per surge in mobile money revenue to $311 million up from $234 million. The company recorded a marginal 2.9 per cent growth in voice revenue to reach $1.97 billion from $1.91 billion.

The telecoms giant saw its net profit decline by 4.4 per cent to $408 million from $426 million realised in 2019. This was driven by a 28.9 per cent increase in customers and a 21.4 per cent growth in transaction value per customer, supported by the expansion in distribution network through more agents, kiosks and Airtel Money branches.

In East Africa, the company reported a nine per cent growth in revenue with all countries except Rwanda delivering double-digit revenue growth with performance improving in the last quarter largely as a result of an increase in voice and data customers in Tanzania, Uganda and Kenya.