Vodacom, Alibaba look to boost SA sales with super-app

Vodacom is expanding its financial and e-commerce services in South Africa through a partnership with AliPay, seeking to accelerate growth in a market hampered by a lack of new broadband spectrum.

Africa’s largest wireless carrier by market value has developed a so-called super-app with the Alibaba Group Holding Ltd. company, which will allow customers to take out loans and shop online as well as make standard mobile payments, according to a statement Tuesday. The service will be available in coming weeks.

“The world is moving toward e-commerce, and while leveraging off what we already have we also need to grow that side,” Vodacom Chief Executive Officer Shameel Joosub said on a call with reporters.

Vodacom, majority owned by the UK’s Vodafone Group Plc, is looking to expand its financial-technology offering in South Africa while waiting for a long-promised auction of spectrum, which it says is needed to expand broadband service and bring down prices.

The auction process is currently bogged down in legal action taken by Vodacom’s rivals, MTN Group Ltd. and Telkom SA SOC Ltd., who object to how the sale has been conducted.

Kenyan partner

Vodacom’s push into e-commerce will be replicated by Kenyan partner Safaricom Plc, whose M-Pesa mobile-money service accounts for about a third of revenue. While the super-app will be available to South African customers, M-Pesa will start to offer more online retail and financial services in other markets such as Tanzania, Joosub said.

Mobile operators in Africa have invested heavily in financial technology to fill a gap left by a lack of physical banking infrastructure. MTN is looking to carve out and possibly list its financial-services business, while Airtel Africa Plc is looking at similar options.

Vodacom upgraded its profitability targets on improved prospects for Safaricom and other businesses outside South Africa, while announcing improved full-year earnings and sales. Operating profit is now expected to increase by mid-to-high single digits over the next three years, the company said, up from a mid-single digit target set in November.

The shares declined 0.8% as of 10:06 a.m. in Johannesburg, and are 1.3% lower this year.

The carrier declared a dividend of R4.10 a share, up from R4.05 a year earlier.