South African company 'buys' Safaricom in a deal worth billions

david nganga

May 15, 2017 12:24 PM

The mobile network will have a greater access to Safaricom's Mpesa services

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Leading British telecommunications company Vodafone has transferred part of its indirect shareholding in Kenya’s Safaricom Ltd. to its South African unit Vodacom Group Ltd.

The deal will see Vodafone sell its 35 per cent stake in Safaricom to Vodacom estimated to be worth Sh284 billion ($2.75 billion).

Vodacom made the announcement on Monday morning while releasing its Full Year 2017 results.

“It’s a big step in terms of commitment of Vodafone to Vodacom.”

“Selling the asset to us does show, at least in east and southern Africa, that the assets are all under Vodacom,” said the company’s CEO Shameel Josub.

The deal will see Vodacom enjoy greater access to products such as M-Pesa, Safaricom’s fast-growing mobile-banking service.

Joosub said that he wants the company together with Safaricom to jointly grow Mpesa business in the continent.

“This deal is a very strong M-Pesa play because it makes you the biggest financial services player in Africa,” he stated.

Additionally, Vodacom will issue 26.8 million new shares to its parent company for the stake whereas the UK Company will retain a 5 per cent holding in Safaricom. The Kenyan government will on the other hand keep 35 per cent.

Vodafone Group has given assurances to the Kenyan govt. to ensure the ongoing success of the long standing partnership between Safaricom, the wider Vodafone Group and the government.

Safaricom is the country’s leading mobile network operator with a huge market share of 71 per cent subscribers.

Last week, the firm released its FY 2017 results reporting a record 48.4 billion net profit. This was mainly driven by M-Pesa revenues which increased by 32.7 per cent to Sh55.1 Billion.

david nganga