Pepkor Holdings is reshaping South Africa’s retail‑tech landscape, turning its massive store network into a powerful vehicle for smartphone financing. The JSE‑listed retailer’s interim results for the six months to 31 March 2026 show the FoneYam rental portfolio swelling to a R2.6 billion book value, even as total handset volumes remain essentially flat. By shifting focus from outright sales to multi‑month rentals, Pepkor is turning a traditionally one‑off transaction into a steady stream of recurring revenue.
The FoneYam product ignited fresh demand, adding 1.3 million new accounts – a 32 % jump over the comparable period – and pushing the active customer base to 2.4 million users. Over the past year the rental book has surged by 53 %, rising from R1.7 billion to the current R2.6 billion. This growth comes despite handset sales across all Pepkor brands hovering around 6.7 million units, virtually unchanged from the 6.8 million sold a year earlier.
Handset sales and FoneYam activations by Pepkor brand (H1 2026)
| Brand | Units sold | % change YoY | FoneYam activations | % change YoY |
|---|---|---|---|---|
| Pep | 4.9 million | +4.1 % | 750 000 | +42 % |
| Ackermans | 1.6 million | +6.2 % | 531 000 | +14 % |
| Specialty* | 225 000 | +42 % | 35 000 | – |
*Specialty division includes Tekkie Town, Dunns, Code, Refinery and the newly acquired Legit, Swagga, Style and Boardmans brands.
The table highlights that while overall sales are modestly up, the rental activations are growing far faster, underscoring the potency of the financing model.
Pepkor’s disaggregated financial‑services arm – which bundles FoneYam, Capfin lending, Abacus insurance and the forthcoming PlusB bank – delivered R3 billion in revenue, a 41.6 % rise, and R691 million operating profit, up 63.4 %. The company notes that profits in the cellular rental and insurance segments have effectively doubled, signalling a robust diversification away from pure retail margins.
Pepkor smartphone rental fuels recurring revenue growth
Beyond the headline numbers, the rental model is delivering a steady cash flow that cushions the retailer against macro‑economic headwinds. The active cellular SIM base now tops 30 million, generating R1.1 billion in recurring revenue, a 13.4 % increase on the half‑year. Notably, the take‑up of a second FoneYam rental after completing the first exceeds internal expectations, suggesting that customer lifetime value is climbing faster than the group’s original forecasts.
Pepkor’s position is unusual in a market routinely dominated by network operators such as Vodacom, MTN, Cell C and Telkom. The retailer does not own spectrum or a mobile network, yet its 6 657‑store footprint, sophisticated credit‑scoring infrastructure and the financing layer of FoneYam give it a unique leverage point. By embedding the rental service within its physical stores, Pepkor reaches consumers who might otherwise be excluded from traditional mobile contracts, especially in lower‑income townships where cash flow constraints are acute.
The strategic pivot also mitigates the impact of a weakening rand and the surge in component costs driven by AI‑enabled supply‑chain pressures. Instead of forcing consumers to shoulder the full price of a device, the rental model spreads the cost over several months, absorbing part of the affordability shock and converting a single purchase into a multi‑month income stream for the retailer.
Pepkor’s ambition does not stop at smartphones. The group is leveraging its retail and financial services network to launch PlusB, a prospective bank aimed at providing basic banking services to its massive customer base. A Section 16 application was lodged with the Prudential Authority in March 2026, marking the final regulatory hurdle before formal bank registration.
The move into banking reflects a broader trend among South African retailers to blend commerce with financial inclusion. By offering credit, insurance and now banking alongside everyday goods, Pepkor is building an ecosystem where customers can shop, finance, and bank under one roof. If successful, this could reshape the retail‑financial divide and cement Pepkor’s status as a post‑pandemic growth engine.
Overall, the interim results paint a picture of a company that has re‑engineered its business model to thrive amid volatile economic conditions. While handset sales plateau, the rental‑driven revenue and expanding financial‑services suite have generated impressive top‑line and profit growth. As the PlusB licence looms, Pepkor may soon transition from the country’s largest discount retailer to a multifaceted financial institution, reshaping how millions of South Africans access technology and banking services.