Vodafone to sell 34.94% stake in Safaricom to Vodacom

Alan Burkitt-Gray
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South African group Vodacom, 65% owned by Vodafone, will take large stake in Kenyan mobile operator Safaricom

South Africa’s Vodacom group is to acquire a strategic stake in Kenya’s Safaricom from Vodafone, which is a shareholder in both companies.

Vodacom, which owns a number of operations in sub-Saharan Africa, will pay 35 billion rand ($2.6 billion) for a 34.94% stake in Safaricom, leaving UK-based Vodafone with just 5%. Vodafone owns 65% of Vodacom and will not vote on the transaction.

Shameel Joosub, a former CEO of Vodafone Spain and now group CEO of Vodacom, said: “This is an exciting occasion for Vodacom and a unique opportunity to diversify our revenue growth and profitability. Acquiring a strategic stake in Safaricom will provide our shareholders with access to a high growth, high margin, high cash generation business operating in a high growth market.”

The Kenyan government will become the largest shareholder, with 35% of Safaricom, slightly more than Vodacom’s stake.

Safaricom is a pioneering mobile money operator. Its platform, M-Pesa, has over 19 million customers. The proposed transaction will improve Vodacom’s presence in east Africa, increasing the company’s growth in financial services customers to 32 million.

Joosub said of the planned deal: “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.”

Minority shareholders will vote on the matter in August. “Given that this is a related-party transaction, appropriate governance controls have been implemented to ensure that the transaction was and is negotiated, evaluated and executed on an arm’s length basis,” said Joosub.

Vodacom said it has appointed an independent expert, Deloitte & Touche, to provide a fairness opinion on the proposed transaction.