Vodacom Group Ltd Ord

Good afternoon and good morning to those joining the call in the US. Welcome to the highlights call for our year ended 31st of March, 2026. I'm joined by our Group CFO, Raisi Bey Murati, as well as our Head of Investor Relations, JP Davids. We trust that you enjoyed our video presentation that we screened before this call. The video is available on our website and covers our purpose-led strategy, Core Vision 2030, and the performance against our strategic ambitions. Not able to watch our presentation, I'll take you through some of the key highlights while they move into a Q&A session. We had a great financial year which showcased our geographical and product diversification and growth potential. We delivered on our double-digit EBITDA growth target, setting up an excellent year for shareholder returns. Our full-year dividend totaled 735 cents per share, up 18.5%. Return on capital employed expanded 4 percentage points to 27.5% as we executed on our efficiency and sharing agenda to improve returns. We delivered hard currency net income growth of 21.3% in Euros. A strong commercial performance also helped us deliver these shareholder outcomes. Customers were up 12.3% to 237 million. This positioned us to upgrade our Vision 2030 customer target to $275 million from $260 million. Our financial service business, which is the leader on the African continent, continues to grow from strength to strength. We upgraded our Vision 2030 target to 130 million financial service customers, having reached 103 million during the year. We see financial services as a key differentiator for our customers and our investment case. Financial Services now makes up 28% of our profit before tax. In addition to our product diversification, we are also seeing clear benefits from our footprint. We operate across eight markets in Africa, but manage the business in four segments. Starting in the north with Egypt, we reported a stellar set of results in financial year 2026. Egypt contributed 15.3 billion rand to the group's operating profit, up 48.9% on the rand basis. The growth is broad-based across consumer, business, mobile, fixed and Vodafone cash. While service revenue growth returned to the 20s in Q4, we are pleased to have secured another double-digit price up in Egypt last week. This is expected to help us navigate through a period of higher energy prices and promote industry sustainability. Shifting further south to Safaricom, in December we announced a transaction to increase our shareholding in Safaricom to 55%. This would allow us to fully consolidate Safaricom. This transaction was approved by Parliament and all necessary regulatory bodies but is subject to a status quo order issued by the High Court of Kenya. We expect an update on this ruling on the 18th of May 2026. Planning this outcome, we will be able to finalize the deal very quickly. Ahead of that, and as an associate, Safaricom contributed 4.6 billion rand to operating profit, increasing 38.3%. Safaricom's result was supported by an excellent performance in Kenya, with EBITDA margins of 56.7%, up 2.7 percentage points, and lower losses in Ethiopia. In Kenya, Savaricom was awarded 25-year operating and spectrum license renewal, providing long-term regulatory certainty for the business. Our four markets that make up the international business increased operating profits 67.2% to R4.9 billion. This result reflected double-digit service revenue growth in Tanzania, DRC and Lesotho. Operating leverage of these assets was also evident in the year with EBITDA margins recovering to 34.6% of 29.3% in the prior year. We continue to work on pricing frameworks across our markets. We see scope for more of our markets to introduce price flows which will support the healthier telecom sector with the appropriate levels of investment. Finally, to South Africa, which remains the largest component of operating profit at R20.5 billion. The business demonstrated resilience despite the challenging macroeconomic environment and increased competitive noise. Growth was supported by the contract segment and beyond mobile. Pressure on prepaid moderated in the fourth quarter and we are expecting a better performance in due FY2027. Pleasingly, EBITDA grew 1.8% in the second half as we kept margins broadly flat. This reflected our cost-obtainment efforts. From a strategy perspective, we were pleased to close the South African Fiber Deal with MESIV in December 2025. With our injection of cash and assets, MESIV will re-accelerate its fiber rollout, adding another double-digit growth lever to the group. At a group level, the strong growth across three of our segments delivered a net profit to equity shareholders of R20.6 billion and with headline earnings per share of 1053 cents, up 22.9%. Shifting from performance to purpose, which is at the heart of Vodacom, our video presentation sets out the progress we are making on our three purpose pillars of empowering people, protecting the planet and maintaining trust. We have well-established Euro projects and new initiatives that drive each of these pillars. Before we move to Q&A, I will make some comments on our medium-term targets. When we complete the Safaricom deal, we will combine Vodacom's existing growth engines and free cash flow generation potential with that of Safaricom. This will position the group to accelerate growth and deliver effective returns with a portfolio of market-leading assets across Africa. As a result, we intend to provide an update on our Vision 2030 targets once the transaction closes. Ahead of then, our group service level in EBITDA targets with double-digit growth is unchanged. This year, we have also added a new target, which is operating free cash flow, to enhance shareholder visibility for management's long-term incentives related to this matrix. And finally, we narrowed the group capital expenditure target to 13.5 to 14.5. This is to provide a more accurate steer of our medium-term CapEx ambitions as we continue to benefit from sharing capital. partnerships and new low-cost funding models, including grants. That concludes my review. Manasi and I are now ready to answer any questions you may have.

Thank you, Shamil, and good afternoon to everyone. This is JP. We're going to kick off with Safaricom as the first topic of the Q&A. There are two questions for Safaricom, one coming from Tando at UBS and the other from Jono at ATSA. Tando at UBS is just asking for an update or any colour on how and when the acquisition may be closed, citing that there are some articles in the Kenyan press pointing to delays towards August. Then Jono is picking up some news flow in Kenya related to their budgeting cycle, which may drive higher taxes on things like mobile devices and banking fees. Wondering how we as Safaricom's controlling shareholder would look to mitigate these type of headwinds going forward. And I guess I would take the opportunity to just talk more broadly about the regulatory environment in Kenya. Shamil, are you okay to kick off with those?

Sure. So I think firstly from a deal closure perspective all the regulatory approvals have been given in Kenya in terms of parliament and the different regional and local regulatory bodies. So all the approvals have been given. The deal is subject to a preservation order or stay order at the moment where there's a court case challenging the transaction. The judge is to rule on the conservatory orders it's called by the 18th of May. If it's lifted it will give us a chance to complete the transaction. That's the one part. If it's not lifted it will be the court case. So the court case will continue anyway. But the court case could be a few months later if the court so decides. So we are a little bit in the court's hands. But we think the case is quite strong and there isn't a reason to delay. So we'll see what the court decides. And then in terms of the overall regulatory environment, I think very positive that Safaricorp has managed to basically obtain a 25-year operating and spectrum licenses and so on. And all the licenses and spectrum have been renewed for 25 years. That provides certainty to the business and so that's a very, very positive development in the Kenyan environment. Secondly, so very pleased with that and I think in terms of the budget increases, this is what I would call business as usual. We deal with these things every year in different countries. governments increase their taxes it's something that we have to navigate what we try and do is try and make sure you know that we can balance the impacts of that on consumers and you know we try and negotiate with governments to talk about you know not putting price increases in the wrong places like smartphone penetration I think one of the challenges on smartphones going into this next cycle is going to be memory costs. So we'll be engaging governments to say please remove duties to assist because otherwise it will slow down the number of smartphones that uptake in a particular year. But this will be a global trend and it will affect all operators alike.

Robert Grindle from Deutsche Bank has a couple of questions, but I just want to theme them particularly around Egypt, and then we'll come back to a few of his others. But specifically around Egypt, trying to get a better sense of the magnitude or the impact of the price ups that have now been approved in the market. And I think alongside that, perhaps we can just follow on while we're on the theme of Egypt with a question from Tondo from UBS asking specifically about those new low entry plans in Egypt. Is it fair to assume, in his words, that that could create pressure on ARPU? And then finally, around Egypt, we are growing faster than peers in the market. How are we doing that? And can we do that through this next round of price hikes?

Yeah, so price increases in Egypt will be between 9% and 15%. and that will be executed across the entire industry. So that's the one part. The low-entry plan, which is about a five-pound plan, will also be executed across the industry. And I think it's done smartly to balance on the one side the need to cater for raising energy costs and so on with the price increase, with making sure that the poorest of the poor are not affected through a low entry plan. No, we don't think it affects, that it will affect the growth of the market and the opportunity. I think one of the things that, why we're doing well in Egypt and why we continue to perform, I think the, so firstly I think the market structure is very good. Secondly, I think our execution capability from a brand perspective, from a distribution perspective, from a fintech perspective is very, very strong. Our content as well, loyalty, so all the different elements plus our personalization, AI generated offers, all of these type of things are extremely strong, which gives us a very good platform to continue to build on. And as you can see, the growth is not in one area. It's across the business. I think execution capability and so on will remain strong going into the year. And, of course, we always try and run faster than competition. So there's areas where competition will try and copy and so on. And then we need to be a couple of steps ahead. And I think the team's proven over the last couple of years that they're capable of doing that.

Staying with Egypt, Maddy from HSBC had a couple of questions. The first one is maybe for Asebi. Can we just talk to what is seen as slightly softer margins in the second half of the year in Egypt, provide a little bit of colour there? And then, Shamil, the question is coming through in different ways, but it's really around will revenue growth re-accelerate given the pricing decision in the market? So perhaps a little bit of colour around expectations for growth into FY27 for Egypt.

Yeah, so the margin softening, hi everyone, the margin softening was likely to do with the war impacts given the changes in currencies or the FX. We've seen some weakness coming through the EGP in line with what has happened in other emerging markets and the FX loss from the working capital side is what has impacted our EBITDA margin. And in addition to that, we have continued to invest, particularly to support our financial services business. So more taking a long-term view. And that softening is nothing to be too concerned about. Otherwise, we see a sustainable margin base for the rest of the year, which the margin was roughly about 45% for a better part of the year. And that is what we see as a sustainable margin.

Okay, in terms of growth rates for FY27, we think that the business will grow mid-20s for the next year, whilst being able to maintain margins. In the longer term, we think that the CAGR is around about in the early 20s. So that's where we are. in that context what's driving it also will be we will continue to do things one is the spectrum investment that we've made is helping us to unlock growth and really take down and any and to reduce the blocking quite considerably in terms of so that's been really really good from a customer experience perspective but also As we move customers to 5G, we're seeing much better growth. Also, adding more capacity through the 1800 spectrum that we've acquired is also helping us to monetize a bit better. The capex intensity is expected to be over 15% capex to sales, as we've seen that when we put the money in, we're able to to monetize and get a very quick return.

We are going to shift to the international business segment and a couple of questions there from Nadim. Firstly around Mozambique growth. What are our expectations for FY27 after lapping some of the pricing initiatives? And just related to that, and I think it's a slightly broader question, just thoughts around international remittance as a key opportunity for the impressive services of BeyondCore. And then just staying with the international markets, maybe this one is for you, what is causing that service revenue slowdown that we're seeing in DRC in the final quarter of the year?

Okay, on Mozambique, I think we haven't gone through a lot of the pricing changes and the pricing growth. For the year, we had 3.3% growth in service revenue, and it's about a $6 billion a year business now. What we see happening is that the growth will accelerate, absent the price low to kind of higher single-digit growth. What the price changes that we're talking about and so on that has not yet been finalized, it can get back into double digit growth. But that is still ongoing in terms of conversations with government in finding the right way to be able to execute it. They have concluded their cost studies and regulatory approvals and so on. In Mozambique and DRC there were proper cost studies done by the regulator and the need for pricing regulation or price laws have been identified to ensure the continued investment cycle. It's just now how to manage it and when and so on that becomes important. In terms of M-Pesa, the growth rates are very sustainable. We have had very good growth across the portfolio. Specifically in the international segment, it's grown quite strongly at almost double digit, sorry, almost in the 20s, so very strong growth all round. Customer growth is very strong as well so I think we're quite pleased with the performance in that segment. So basically what we're doing now is making sure that we can roll out all the models across all the markets. Kenya and Tanzania are ahead of the rest of the market in terms of use cases. So we're trying to grow the number of use cases and making sure that we have all the products launched in all different markets. So I'll give you an example. What we're doing is taking the insurance success that we have in South Africa and then creating an insurance COE for the rest of our markets. We're doing the same for same international money transfer out of Kenya into the different markets. So we're leveraging that capability and capacity throughout different markets to try and accelerate revenue. Another example is we've launched wealth management in Kenya and specifically something called the Ziri Stock Trader which now accounts for 47% of the trades on the Savaricom Stock Exchange. So this is how quickly these things accelerate and of course we'll learn from that and then take those learnings and then implement that into various markets. Remember only 103 million customers are using Fintech services so still a big opportunity to grow faster across the group.

So maybe just to also add in terms of the remittance opportunity so here we see not just as a use case for growing our M-Pesa offering but also in terms of securing FX and given that our remittances is more inbound so it strengthens our relationship with the banks that we give inflows and we have found in different markets opportunities where it allows us access to that FX for purposes of our needs and that comes quite handy in markets which are particularly low on liquidity such as Mozambique. So it is really quite a strategic asset apart from just the normal additional product that is offered through M-Pesa and all the conveniences that comes with it. The question about the service revenue slowdown in DRC, so as you may be aware the eastern DRC in Kivu, the wall flares up from time to time, it goes quiet and then it goes noisy and the service revenue was impacted largely by that and increment weather when it's a rainy season the logistics are very difficult in DRC so combination of those factors but we have seen A bit of a pick-up now, particularly from a world perspective, we have seen a bit of a pick-up, so we see that as a temporary damp, but the output for growth in service revenue as well as EBITDA in DRC remains fairly strong, a double digit in dollars.

We're going to move to South Africa and unsurprisingly prepaid remains a hot topic amongst the analysts and investors on the call. Let's pick up on Jonathan and Nadine's questions to cover some of the bigger picture on SA prepaid. Shamil, can you provide a little bit of colour on the outlook for SA prepaid revenue and whether we could see a return to revenue growth before the second half of 27? And then related to that, Nadeem, just asking around the competitive intensity and promotional intensity in the market, how has that evolved in prepaid year-to-date?

Okay, so I think on the prepaid outlook, very pleased that the repricing and some of the initiatives that we took in 2019 Q3 into abated in Q4 so we started to see the elasticity coming through and that basically will flow into the coming year as well. So I think maybe just a little bit of context remember in South Africa and where you'll see a difference between I'd say Vodacom and MTN and the other operators is Vodacom and MTN still have more voice revenue than the other operators. Voice is in substantial decline because the move to voice of IP or things like WhatsApp voice and so on. During the period that has come down to 29% of basically of prepaid revenue. And if we look at it in terms of overall service revenue, then it's now 12% of overall service revenue. So it's becoming, it's not gone and there will still be declines and the biggest thing in prepaid is trying to manage that decline because your traffic growth remains very strong. Data traffic growth was 32% so your traffic growth in South Africa at the back of the level of investment is very strong. You also had some data repricing and that's starting to stabilize so we think that In Q1, we'd be back in positive territory for prepaid in the South African market. What's also encouraging, if you look at the smartphone penetration, it's up 10.6% to 35.7 million customers, and 4G and 5G devices are also up 15% to 28 million. So these are underlying trends that are very strong that will help to convert faster data revenue and be able to grow the revenue better the big thing of course is managing the voice decline on the one side and then secondly the monetization of the data growth and I think you know a lot of the you've seen more of that elasticity come through in the fourth quarter versus the third quarter

Just a specific question from Prashendran around our voice revenue trend, just to confirm the exact decline, noting it was about down 13, down 14 in the third quarter.

Yeah. So it's minus 13, basically on voice decline for the year.

And then in the fourth quarter, we improved a little bit to down 11.6. 11.6, yeah, down 11.6.

And we saw an acceleration in data revenue growth, monetization in Q4 to 5.5%.

There are a few questions on fixed service revenue for South Africa. The first one is, what is driving the sequential slowdown in growth from high single digits towards 6% in 4Q? Perhaps I can quickly take that one. And then a bigger picture question on the traction we're seeing since we've finalised the CIBH or massive deal, that's from Rohit of Citi, and are we already offering services on CIBH's footprint? So just on fixed, quite right, has slowed down quarter on quarter. If you look back to the fourth quarter in financial year 25, it was a very strong period. And we had a good deal in there related to one of our corporate customers and that created a bit of a tougher comp into this particular quarter. So no change in the underlying trends for SA Fiber. I still think that that contributes nicely to the Beyond Mobile story for the SA business going forward. Shamil, do you want to take the bigger picture question on Massive?

Sure. So I think on MESA, firstly from a revenue perspective, 7.6 billion of revenue, 5.2 billion of EBITDA, then you can see that the margins are very, very healthy in that context. So that's the positive. This is before Eurotel and Eurotel has gotten Comcom approval in the final throes of the regulatory approval. as well so and then they'll be able to consolidate that and that gives them an extra leg I would say to further expand fibre penetration I think from a synergies perspective I think they can definitely benefit from some of the let's call it our procurement benefits especially with the biggest suppliers and so on to make sure that they can take part of some of the pricing opportunities that can prevail. And of course, they are looking at those competitors and so on. And then from a sales perspective, of course, the ISP part, I mean that's separate to massive and that really means that we need to run faster and we are seeing a lot more traction on prepaid fibre as we are now reselling that full swing and we are seeing every year gains in our ISP penetration on the one side and also fixed wireless performance.

A question from Tando on the South African EBITDA margins. He's noted they're down around 30 basis points in the second half of the year. Can you give us a little bit of, or them, the audience, a little bit of feedback on some of the key drivers of the margin into the second half of the year, and maybe some of the key pushes and pulls of this margin into FY27?

Sure. We saw a better traction from a revenue perspective, particularly prepaid, as has been explained by Shamil earlier. So big focus on that to a point that we closed with a almost neutral position and that was helpful from driving the revenue. In terms of cost, SA has always run a very tight cost program which will continue with and that is really what is giving support to margin. The outlook is to still grow EBITDA in the mid kind of single digit type number and that is how we see the contribution coming both from the revenue as well as from the cost program. well aware that our Beyond Mobile comes at a lower margin but nevertheless a fairly strong business but we believe that it is a good contribution in terms of continuing to drive the growth in the top line so our margin outlook is actually better in the new year FY26 given that the 2026 was also carrying the one-off that we picked up in the first half.

Staying in South Africa, Rohit had a question on the financial services revenue growth trend for South Africa, picking up perhaps that there was a decline quarter on quarter. Maybe that's one we can touch base with after the call, Rohit. We did see a little bit of an acceleration in financial services. The full year we did 8% and then in the final quarter touching on double digit. And he had a related question, are you seeing any impact on airtime advance? So, you know, in our case, airtime advance is quite consistent with the prepaid trend more broadly, so not seeing any great shakes on airtime advance at this point. Anything to add to that, Shamil?

I think airtime advance is a more mature product now for us, and now what we're doing is either leveraging that data and capability you know across other products and to do other forms of lending and so on and in the year the strong financial service growth has actually come from more from the insurance part which has accelerated in some nice teams growth and that's contributed to the strong financial service performance during the year.

Onto regulation in South Africa, Jono from APSA wanted a bit of colour on our thoughts regarding the Electronic Communications Amendment Bill, which appears to have a pro-MVNO slant. So just maybe how or what we would do in terms of next steps, how do we respond to these proposed amendments and our thoughts on whether it could destabilise the industry.

Yeah, I think, I mean, firstly, the bill hasn't been properly consulted on, so I think it will end up being consulted on more in the next phase. And then we'll put forward our comments and so on. Yeah, I mean, there's nothing in there that, you know, there's talk about licensing MVNOs and, you know, That's positive and negative for the MVNOs, I would say, because, you know, if they're operating in a licensed regime, then they need to also, you know, deal with all the social obligations and license fees and all kinds of things that would happen. So, you know, but it doesn't change the context of them, you know, selling products. Today, they don't need to be licensed. Tomorrow, they would need to be licensed. So I don't think it changes Because remember in South Africa it's easy to become an MVNO. In a licensed environment you'd have to apply for the license first.

We are now going to shift to some group questions. Robert Grindle from Deutsche Bank noting that while we've nailed six out of eight markets from an NPS leadership perspective, there are two that we haven't. So which markets are those? And, you know, for reference, that's South Africa and Kenya. What are the plans to address our leadership, NPS leadership in those markets, Shamil?

Yeah, so I think, I mean, South Africa is neck and neck, and so is Kenya. And I think, to be honest, when you're the biggest three in both markets, the people are more critical. That doesn't mean we don't, what we do is we unpack every measure, and we find, you know, and we look at how can we close the gap, and the teams have very clear goals. Just to give an example, in South Africa, we ended the year neck on neck, basically equal to joint number one, if you like. And then in Kenya, we closed the gap quite significantly during the year as well. So there's very clear focus, direction, team effort from the group right into each of the markets of initiatives. looking at what the customer part is, deep detector focus, what are your deep detectors, what are the reasons for detection, how can you fix it, and so on. And then, of course, on churn as well, and then people are incentivized accordingly. So all of management across all the markets are basically incentivized on NPS, churn, deep detection, and so on.

Recep, maybe this one is for you. Maddy from HSBC picking up on the new guidance related to operating free cash flow. He's asking, can dividends be linked to operating free cash flow going forward or will we remain linked to EPS? And then just while we're on that theme of operating free cash flow as a growth target, Robert Grindle from Deutsche Bank wondering if we could provide any color on the capex and lease growth or profile for capex and leases going forward within the mix. So clear on what EBITDA growth is going to be, but any color on capex and leases would be appreciated.

So the operating free cash flow measure introduced to create more alignment with the long incentive scheme where operating free cash flow is one of the key metrics and also as has been requested by some of the shareholders so in our responsiveness we just thought let's just add it on the list of the targets that you provide on a medium-term basis. It is not meant or planned to change our metric relating to dividend. So dividend will still be based on earnings, which is 75% of the earnings. Okay.

And staying with you, Rosebi, there are a couple of questions, or quite a few questions on our exposure to energy across the footprint. You know, some are the exposure relative to OPEX. I mean, perhaps we've got something like service revenue to hand. We can just provide a little bit of colour on our exposure to diesel into FY27.

Okay, so I think we still need to finish up the other question on the operating free test flow relating to CAPEX and so we also moderated our guidance for CAPEX moving from 13 to 14.5 to now 13.5 to 14.5 and that is in recognition that the group has somewhat changed in terms of the NICs and whereas SA is more closer to 13 the other components i.e. Egypt and ID are more on the top end so the guidance is really narrowed in that context so it does not change our construct and how we're thinking about you know the or the introduction of operating cash flow does not change the construct in terms of how we're thinking about capex and capex intensity. So, yeah, I think that is just to give a bit more color in one of the other metrics. In terms of the diesel, the direction in how impactful this diesel price is to us, So firstly, from an overall group perspective, the energy compound makes about 4% or is equivalent to 4% of our service revenue and 22.5% of our OPEX, noting that OPEX is roughly about 25% on the cost components. The other pieces are in A and R and direct costs. So 4% of service revenue, which then gives you a good sense of it is not a very material number in the bigger scheme. Right at the beginning of the noise relating to oil prices increasing, we started looking at different options in different markets. So first of all, the easiest thing to do was bulk buying. So we did bulk buying in market size that we have supply of two or three months and really quite frankly the bulk buying the only limitation is storage and obviously you know that diesel has an expiry date so to continue to strengthen our relationships with the oil majors to make sure that we don't run out of supply in some of our markets The telco industry is formally recognized as a strategic industry, where if there's a shortfall or rationing, we are less likely to be disadvantaged, which we welcome in those different markets. In markets where we do not have that obvious categorization, like in SA, where it is first to be pronounced, like we've seen during COVID, that you need to first pronounce the fact that it is a crisis period and therefore the definition of those markets which are categorised as strategic but that said our relationship to the oil majors is still such that we are quite comfortable that we have secured some supplies. We also looked at hedges so in SA we managed to close the hedge before the last price increase which there was an increase in April and there was an increase in May. And before the second increase, we were able to close a hedge where 100% supply for the next six months is fully hedged. So we're quite pleased with the pricing at which we've been able to do the hedge. We are working with our... teams in the other of course as well as obviously the local banks but supported by the banks from SA side to look at hedging opportunities in those markets so we believe that the additional costs that one would pick up outside of what we have bought in bulk and outside of the price increases that we know today For the large part we can be able to pick that up in our normal cost savings programs where some of the increases we can be able to offset in other lines. So far so good, but it is a risk that we are monitoring very, very closely.

Super. And just to confirm, Rosevi mentioned there, 4% of service revenue at a group for energy costs, and diesel will make up a fraction of that. The vast majority of our energy is on grid. And in most of our markets, actually, outside of South Africa, a lot of that is renewable power now, including hydropower. So, Shamil, maybe a bigger picture question for you around mobile money and a potential IPO. Maddy noting the strong performance of Airtel Africa over the last, call it year, re-rating substantially on its IPO prospects. Where are we and how are we thinking about this position for Vodacom?

We've got a much better business. You know, looking at the numbers, we're three times the size of Airtel, $2.3 billion now across the group once we're able to consolidate Safaricom. And so, you know, just Vodacom markets on its own is about the same size as Airtel and Safaricom on top. then that becomes a very big number. So that's the one side. Actually, Volcom is actually bigger than the Airtel numbers just on its own. So that's the first part, and I think, do we want to list it separately, all of that? No, we're watching the movie, and instead we're hoping that you give us credit for it. So we're watching the movie to see what happens with the Airtel listing on the one side, and on the other side, We'd like to see the market acknowledge more that FinTech is a major contributor and will become a bigger contributor to the Vodacom story and the Safaricom story. And so we continue to give color and so on and accelerate the growth and watch what actually happens and what the implications are for Airtel of listing it separately before we make any calls in that context. But for us it's core business so we want to make sure that we continue to double down and accelerate on the business and continue with the good growth that we see.

Josebi, back to you for a follow-up question on Safaricom and a question around the funding of the acquisition from Jonathan at Prescient. He's asking, you know, has anything changed with our funding plans for the Safaricom transaction? and is the expectation still that the Vodafone loan will be refinanced via accessing bank or debt markets directly and any color we can give at this point in time around that the cost of that funding or the cost outlook for the funding so what has changed is actually a positive development in that when we spoke back a few months ago we said we will

take the term debt and a bridging facility and then replace the bridging facility with preferences. We have done enough preparation in terms of getting the preferences such that there is a strong probability of implementing the preferences immediately given that with the transaction delays. it gave us a bit more time to discuss with the banks. So our plan is that roughly about 9 billion will be done with the PREPS and then from the remaining 36 billion, 27 will still be the facilities with Luxembourg and still with the possibility of being able to refinance. And they're quite well aware that we have just closed preference share program with the banks where they kindly supported us for the massive transaction, $8 billion. So we're about to do $9 billion. So for that reason, you know, kind of giving it a little bit of a planning period is what we think will be more palatable. But indeed, as we have demonstrated through, you know, various transactions that we've done, that we have focused on converting any expensive debt expensive in the form of not being tax deductible to best available funding program which at this stage the press have proven to be we have repaid some of the expensive debt so my point being of that 27 billion whenever opportunities to pay off those facilities come up we will choose repaying or refinancing. So that is part of the program that we'll get into. In terms of funding, we believe the Luxembourg loans are very well priced, you know, somewhere in the region of between 7% and 8%, which is pretty much well comparable to our basket of funding that we have right now. So even if it hasn't been in the period before refinancing, we believe that it will be relatively kind to our balance sheet.

Shamil, a question from Jonty at Alan Gray. Wanted a few more thoughts or a bit of feedback on Tanzania, in particular the customer revenue growth we're seeing in the markets and the direction of market share in Tanzania. And then at the moment, a final and fun question from John at John Davies at Bloomberg Intelligence, asking around any prospects of a non-test launch of satellite direct-to-device in the current financial year? And if this is on the cards, which countries do we think are closest to getting that service?

Okay, so on Tanzania flying, is the short answer. 21.8% service revenue growth, customer growth double digit in PESA growing in the 20s. So really just an all-round fantastic performance backed by strong commercial execution on the one side, but also you've got price regulation in the market, so that's also very important. And then also the PESA part where we do some better than than competitors I think that also stands out for us but we also made a big strategic move that I think is sending us in good stead which is to swap out the entire network to a new vendor which has given us a lot of capacity and so on with the latest modernized equipment that consumes less power and so on So that's been really good. Half of that was completed last year and half of that will be completed this coming financial year. So we're hoping to see that benefit continue into this year as well. And also a lot of focus on margin improvement as well. So we're also seeing margins expand in that market. It's, Tanzania, DRC have become two very good markets for us.

And then the question on the satellites and direct to, direct to cell.

Yeah, so on satellites the way I would think about it is really there's three opportunities around satellite. The one is back walling and that's what I put in the no brainer category. which essentially is the ability to back wall rural sites at a lower cost than what we currently have from traditional players. So that will take every day of the week, and that's what we will use some of the styling parts, the styling agreement for as well. And then as the other operators launch, it gives you more, let's say, more options in that respect. Secondly, you're looking at direct-to-dash or broadband connectivity. There you have styling today. Of course, it's not licensed in South Africa, but we're busy with the rollout into different markets. And that's really where there isn't fiber or there isn't fixed wireless opportunity. I'd say that's where you have the biggest level of potential traction. Not that you won't have some uptake in cities, but the big opportunity I would say is the what we've seen from the providers like Starlink is they start with unlimited and quickly realize that unlimited consumes capacity so then it becomes a you know where you're buying 200 gigs or 300 gigs that type of thing so that changes it compared to fiber that's why I say fiber will always probably be better where good fiber is available that said if you have a lodge in the middle of nowhere You know that will be very beneficial. Then direct to mobile. We have basically the four leader in that space is AST and we have an agreement with them to launch. We have done some tests but we want to do a much more detailed test. with them so that is planned but also there will be other options and we will provide different services from different providers to be able to cater for that we see the bigger opportunity for direct to mobile in countries that are uncovered and or large portions are uncovered so we think in our context that's Ethiopia and the DRC where we think satellite will be a big part of the play In the other markets, satellite will be part of the mix and provide us, be able to give us the ability to provide coverage everywhere. But generally, I think you'd use mobile. And so also, you know, because also the cost of that is what we're working on to make sure that it's available for everyone and not just for a few.

Super. Shamil, that brings us to the end of the Q&A. So happy for you to wrap up the call there.

Thank you. And if you're joining us on the roadshows, we'll see you then. But if you have any questions, please feel free to reach out to JP and the IR team. Thank you. Thanks for joining us.