Vodacom takes over Safaricom stake from Vodafone for $2.6B

Toni Houston
May 16, 2017

Vodacom CEO Shameel Joosub, presenting the group's 2017 financial year-end results at the JSE on Monday, explained that Safaricom offered exciting and strong ongoing growth opportunities, particularly as, with a total population of 45-million, Kenya only had a mobile penetration rate of 88%. The implied share subscription and set-off ratio for the number of new Vodacom Group shares to be issued, in respect of 87,5% of the 39,93% Safaricom shares held by Vodafone Kenya, is equivalent to 1.62 new Vodacom Group shares (cum dividend) for every 100 shares in Safaricom held by Vodafone Kenya. Vodafone will subscribe for new Vodacom shares, and its interest in Vodacom will rise to 70% from 65% now.

Vodacom's interest in Safaricom will contribute about 15% of its earnings before amortisation for the fair value adjustment of assets on acquisition.

"The agreement Vodafone Group has reached with the Government of Kenya will ensure Safaricom continues to have strong Kenyan representation at board and management levels", Safaricom chief executive Bob Collumore said in a statement.

The transaction, which has a value of 2.361 billion euros based on Vodacom's closing share price on May 12, will increase Vodafone's ownership in Vodacom to 70% from 65%.

"I think by consolidating the African businesses, you could apply scale and target these markets to make a wider opening to Vodacom and Safaricom".

Safaricom's mobile money platform, M-Pesa, is an important driver of Kenyan economic growth, providing essential financial services to over 19-million 30-day active customers.


In operational terms, the group - which has operations in South Africa, Tanzania, the Democratic Republic of the Congo (DRC), Lesotho and Mozambique - closed out previous year with more than 66.786 million subscribers, up 8.9% on an annualised basis.

Vodacom declared a final dividend per share of 435 cents, same as the previous year.

Vodacom and Safaricom "jointly want to grow the M-Pesa business in the continent", Mr Joosub said.

Shares in Vodacom rose 0.2 percent on Friday to 152.49 rand.

The company raised three-year targets for service revenue to mid-single digit per cent growth from low-to-mid single digits and earnings before interest and taxes to a mid-to-high single digit increase.

Data revenue grew 2.3% to R4.113 billion driven by a 29.3% increase in data customers to 13 million, the company said.

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