Vodacom to spend R35bn on Safaricom stake

The telecommunications company says the investment will ‘further enhance Vodacom as a leading African mobile communication company’.

Vodacom announced on Monday it had agreed to acquire a 34.94 percent stake in Kenya’s Safaricom, the global mobile money pioneer, for R34.6 billion.

The JSE-listed telecoms company said in a statement the investment in Safaricom, which launched M-Pesa in early 2007, would provide a large level of diversification.

Vodacom plans to fund the acquisition of the stake currently held by Vodafone Group by issuing new shares.

Steven Ambrose, telecoms analyst, described the purchase of a large stake in Safaricom, even though from its own holding company, as “a smart move to bolster Vodacom’s operations outside of South Africa”.

He added: “It will bring scale and growth opportunities back to the Vodacom operation.”

Vodacom – which has 66.8 million customers in South Africa, Lesotho, Tanzania, the DRC and Mozambique – said the investment in the biggest communication company in East and Central Africa would “further enhance Vodacom as a leading African mobile communication company”.

The price represents a 5.9 percent discount to Safaricom’s share price on the Nairobi Securities Exchange at closing ahead of the announcement.

Shameel Joosub, Vodacom chief executive, described the deal, which is subject to regulatory and shareholder approvals, as “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.

“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,” Joosub added.

M-Pesa is seen as an important driver of Kenyan economic growth, providing financial services to more than 19 million customers.

“The proposed transaction will improve Vodacom’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,” the statement added.

Joosub said: “We have negotiated what we believe is an attractive price for access to an additional 28.1 million customers and one of the most successful and innovative telecoms companies in Africa.”

– African News Agency (ANA)

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