Vodafone To Transfer 35% Stake In Safaricom To Vodacom

Brandon Parsons
May 16, 2017

Under the deal, valued at R34.6 billion rand, Vodacom said it will acquire an 87.5 percent shareholding in Vodafone Kenya, representing a 35 percent indirect interest in Safaricom, in return for issuing 226.8 million new shares to Vodafone, raising the British company's stake from 65 percent now to 69.6 percent.

Vodacom said Monday it has agreed to acquire a 35% stake in Safaricom, Kenya's biggest mobile operator, from Vodafone International Holdings B.V.by issuing 226.8 million new ordinary shares.

Vodafone Kenya holds, as its only material asset, a 39,93% interest in Safaricom and is wholly owned by Vodafone.

The 34.6 billion-rand ($2.6 billion) deal, structured as an acquisition of the stake by Vodacom in return for new shares, is the latest move by Vodafone's chief executive Vittorio Colao to rationalise the group's disparate portfolio of interests around the world.

M-Pesa, launched 10 years ago in Kenya by Safaricom, lets people without bank accounts use their mobile phones to transfer money.

The South African government owns a 14% slice of Vodacom and Kenya's regulators could decide that the deal breaches an ownership threshold that would make it compulsory for Vodacom to make a bid for Safaricom as a whole.

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

M-Pesa registered customers stood at 26.57 million at the end of March, 19.02 million of which were active on a monthly basis, Safaricom reported in full-year financial performance statement.

"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".

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.

Customers in South Africa grew to 8,6% to 37,1m.

He told South Africa's Business Day publication that it made sense to consolidate operations in Vodacom given the group's "scale, advancement and competence in technology".

As at the signature date, the subscription price amounts to R34,6-billion, based on the Vodacom Group share price on Friday 12 May 2017.

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