Vodacom taking Vodafone's stake in Kenya's Safaricom

Ellen Mills
May 16, 2017

According to reports by Forbes, Vodacom Group, the South African telecoms giant, has announced that they will spend $2.6 billion (R34,6 billion) to buy out their parent company's (Vodafone) 34.94% stake in Kenyan operator Safaricom.

The deal will be effected by Vodafone transferring a 35% stake in Safaricom to Vodacom, in exchange for Vodafone being given new shares in Vodacom worth $2.6bn.

Safaricom is the market leader in Kenya with a 71% mobile customer market share, has one of Kenya's most recognisable brands and a highly experienced management team. In March, Vodafone agreed to merge its unit in India with local partner Idea Cellular Ltd. "Selling the asset to us does show, at least in east and southern Africa, that the assets are all under Vodacom".

"The proposed transaction offers an opportunity to diversify Vodacom's economic exposure and earning's profile in a single transaction", Joosub said.

Vodacom said the transaction will improve its 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.

"While Safaricom share-- in some segments remain high, we firmly believe this has been attained through prudence investment and continuous innovation, both of which are integral to our strategy", Collymore said on May 10.

Kenya's government owns 35% of Safaricom, while public investors and Safaricom employees hold 25% and 0.07% respectively. 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.

He added that the deal "promotes the continued successful expansion of the company as well as the opportunity to drive M-Pesa to other markets on the continent".

M-Pesa is a huge cash cow for Safaricom. This deal "is a very strong M-Pesa play because it makes you the biggest financial services player in Africa", he said.

A representative for Vodafone declined to comment.

Headline earnings per share climbed by 4,5% to R9,23, while Vodacom declared a final dividend of R4,35/share, taking the total dividend for the year to R8,30/share. Sales rose 1.5 per cent to 81.3 billion rand.

South Africa service revenue increased 5.6%, aided by strong customer net additions of close to 3.0 million, while global operations service revenue declined 5.6%, normalised up 2.2%, mainly impacted by currency volatility and customer registration processes.

Other reports by VideoGamingPros

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