March 19, 2018

Vodacom to acquire stake in Kenya's Safaricom for $2.59bn

16 May 2017, 10:19 | Rex Hubbard

Vodafone To Transfer 35% Stake In Safaricom To Vodacom - Quick Facts

Vodacom said to buy R34.6 billion Safaricom stake

Vodafone will retain a 12.5 percent interest in Vodafone Kenya, equivalent to 5 percent interest in Safaricom, after completion of the proposed transaction, the company said.

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.

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

The purchase consideration payable by Vodacom Group is the sum of an amount equal to the subscription price payable by Vodafone for 226,8-million new ordinary Vodacom Group shares, which will be set off against the same amount of the purchase consideration, and a maximum amount of KES393,7-million (R51-million) payable to Vodafone in cash.

All this will leave Vodafone with a raised 70% stake in Vodacom, and a much reduced 5% stake in Safaricom.

The R35-billion deal, expected to be concluded in August, presented South Africa's largest telecoms group upside potential for further mobile penetration and data growth in the fast-growing Kenya market, as well as that of its East African neighbours.

Vodafone's stake in Vodacom will increase from 65 per cent...

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Safaricom, with a 71% mobile customer market share, boasted 28.1-million of these customers, the base of which increased at a compound annual growth rate (CAGR) of 8.1% over the last five years.

A statement from Vodacom described Safaricom as "a prized asset on the African continent", particularly with regard to its m-Pesa mobile money platform, which has over 19 million users.

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". Over the past three years, capital expenditure across the Group will total at ZAR37.5 billion with ZAR25.9 billion in South Africa alone. Vodacom has agreed to a two-year exemption from the rule with the bourse, the company said. Fuelled by expanding distribution channels and the expansion of products and services on offer, we increased the number of customers that use M-Pesa by 3.7 million to nearly 13 million, contributing to a 19.4% rise in M-Pesa revenue.

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).

Vodacom South Africa saw a net addition of 3 million customers over the past year, said Vodacom.

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.

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