Vodacom to acquire strategic stake in Safaricom for R35 billion

Tabitha Dunn
May 16, 2017

The Safaricom deal also simplifies the management of two of Vodafone's biggest money-spinners in sub-Saharan Africa and promises to speed up the roll-out across the continent of mobile money transfer service M-Pesa, which was launched by Safaricom in 2007.

Today's deal will mean 35 per cent of Safaricom shares are passed to Vodacom, which will issue shares in return to Vodafone. Based on the agreed terms of the transaction, Vodafone will be exchanging a 35% indirect interest in Safaricom for 226.8[1] million new ordinary Vodacom shares.

"While the transaction will give Vodacom a foothold in Kenya, it will also increase Vodafone's stake in the South African firm from the current 65 per cent to 70 per cent" the United Kingdom giant said in the statement.

Safaricom, which is 35 percent owned by Kenya's government, said in a statement the deal promoted the continued successful expansion of the company as well as the opportunity to take M-Pesa into other African markets.

Commenting on the proposed transaction, Shameel Joosub, Chief Executive Officer of Vodacom Group, said: "This is an exciting occasion for Vodacom and a unique opportunity to diversify our revenue growth and profitability".

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Vodacom is looking to further their African footprint with the recent announcement of its investment in Kenyan telecoms firm, Safaricom.

"Before they do anything with Ghana, they've got to do something about the float and the easiest way is to sell down their stake", said Allan Nichols, an analyst at Morningstar in Amsterdam. As this is a related-party transaction, Vodafone, which now owns 65% of Vodacom, is precluded from voting on this at this meeting. For its part, Nairobi-based Safaricom is under pressure from lawmakers and regulators because of its dominant position in the market, and is facing calls to split.

Vodacom shares rose 0.4 per cent to 153.04 rand as of 2:51pm in Johannesburg, valuing the company at 228 billion rand (S$23.9 billion).

Profit for the year ended March 31 rose to around $1 billion, while its revenue rose 1.5% to $6.13 billion, according to MarketWatch. This was offset by the impact of currency volatility and the anticipated effects of customer registrations and disconnections in our worldwide operations, where service revenue declined by 5.6% (up 2.2%) ...

The group declared a final dividend of R4.35, taking its total for the year to R8.30, a 4.4% raise on the previous year's R7.95.

Other reports by Guamnewswatch

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