South Africa Smartphone Rental Boom Strengthens Pepkor Financial Services

Pepkor is turning its discount retail scale into a powerful mobile platform, using its rental model to build annuity income across more than 6,600 stores.

From box-moving to annuity mobile income

Pepkor‘s latest interim numbers point to a mobile business that looks less like a handset retailer and more like a consumer platform.

For the six months to 31 March 2026, the FoneYam smartphone rental book rose to R2.6 billion, up from R1.7 billion a year earlier. The group activated 1.3 million new FoneYam accounts in the period, taking the active rental base to 2.4 million users.

Meanwhile, handset volumes have stabilised rather than grown. Pepkor sold around 6.7 million phones across Pep, Ackermans and its Speciality chains, compared with 6.8 million in the same period last year. This flat trajectory, alongside rapid rental growth, signals a deliberate pivot away from outright device sales toward recurring revenue.

FoneYam’s rollout is broad. At Pep, handset sales edged up to 4.9 million units, while FoneYam activations jumped 42% to 750,000 accounts in the half. Ackermans sold 1.6 million phones and added 531,000 FoneYam activations. The Speciality division, which includes Tekkie Town, Dunns and Legit, sold 225,000 handsets and signed 35,000 FoneYam customers after extending the product into more stores.

Pepkor is not trying to replicate Vodacom, MTN, Cell C or Telkom on network infrastructure. Instead, it is leveraging more than 6,600 South African stores to distribute devices, airtime and rentals in areas where price sensitivity is high and credit access is limited. As handset prices face pressure from a weak rand and higher global component costs, rental models help customers avoid large upfront payments and still access newer smartphones.

Building a mass-market mobile and financial services platform

The rental push sits inside a wider financial services strategy. Pepkor’s financial services division, which houses FoneYam, Capfin, Abacus Insurance and the planned bank PlusB, generated R3 billion in revenue in the six-month period. Operating profit from this division reached R691 million, helped by growth in phone rentals and insurance products tied to devices.

Recurring mobile income is also building momentum. Pepkor’s active SIM base now exceeds 30 million connections, and ongoing cellular revenue reached R1.1 billion in the half. Many FoneYam users are returning for second rentals after completing earlier agreements, which suggests the offer is gaining stickiness and supports longer-term annuity income.

The next step is banking. Pepkor has submitted its Section 16 application for its PlusB banking venture to the Prudential Authority, moving along the regulatory path to bank registration. If approved, the licence would give Pepkor another lever to deepen its ecosystem of retail, lending, insurance and mobile services for the mass market.

For investors, the direction of travel is clear. Pepkor is using Pepkor FoneYam rentals and its SIM base to shift its earnings mix towards higher-margin, annuity-style revenue anchored in affordability and reach.

The key questions now are the pace of further FoneYam penetration across the store network, the conversion of SIM users into financial services customers, and the timing and conditions of any PlusB banking approval. These will determine how far Pepkor can move from retailer to full-scale mass-market mobile and financial services platform in South Africa.

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