Connect with us



Vodacom announced on Monday that it is buying a 34.94% strategic stake in Kenya’s Safaricom held by its parent company Vodafone Group.

The deal is subject to regulatory and shareholder approvals.

The €2.3bn switch will be paid for in new Vodacom shares issued to Vodafone. That deal means Vodafone has ups is stake in Vodacom taking its ownership of the South African business above the 70 per cent mark.

The telecoms group said the deal “streamlines and simplifies the management of its sub-Saharan African holdings”.

“Today’s deal means 35 per cent of Safaricom shares are passed to Vodacom, which will issue shares in return to Vodafone,” according to a statement.

While Vodafone will maintain a 5 per cent stake in Safaricom, which it has controlled alongside the Kenyan government. Reports suggest that Vodacom would acquire the government’s stake.

Vodafone in a statement said the transaction is set to further enhance the company as a leading African mobile communication company.

Currently MTN is seen as the continent biggest Mobile communication company, but it seems for the first time in over a decade that position could yet be truly under threat.

Vodafone has long harboured a desire to increase its exposure to the African market, where for the vast majority of the population the only communication tool is a mobile phone.

The journey for the British multinational telecommunications company has been strategic, and began many years ago precisely in 2008, when Vodafone made a £1.2bn move to take control of South Africa’s largest mobile phone operator, Vodacom, as it looks for growth in Africa mobile phone markets.

At that point of take over Vodacom boost a subscriber based of over 34 million customers in South Africa today the company subscriber based as skyrocketed to 63 million and 30.3 million data customers.

Vodafone through its Vodacom company is now acquiring Safaricom’s leading mobile money platform, M-Pesa, is an important driver of Kenyan economic growth, providing essential financial services to over 19 million customers.

The proposed transaction will improve Vodacom Group’s presence in East Africa, jointly increasing the company’s growth in financial services customers to 32 million, making it a formidable player in financial services on the continent.

Vodacom’s interest in Safaricom proportionally equates to approximately 12.6% of the Group’s reported service revenue as announced in its latest year-end results. The transaction provides a large level of diversification in a single transaction and Safaricom is highly complementary to Vodacom Group’s existing footprint.

“In addition to producing mutually beneficial opportunities for growth, it will create further incremental value through the close cooperation between the two businesses, particularly in driving M-Pesa adoption across our operations.”

Joosub adds: “The transaction will be financially accretive for Vodacom’s shareholders based on FY17 results, excluding the effects of amortisation on intangibles created on the acquisition, and will further enhance our investment case and strategic position.”

Click to comment

Leave a Reply