Vodafone ups stake in Vodacom after transferring direct interest in Kenya's Safaricom

Vodafone ups stake in Vodacom after transferring direct interest in Kenya's Safaricom

Vodafone ups stake in Vodacom after transferring direct interest in Kenya's Safaricom

Safaricom is owned by the government of Kenya (35%), Vodafone Kenya (39,93%), public investors (25%) and Safaricom employees (0,07%).

Vodafone International gets 226.8 million new ordinary shares in Vodacom, which will increase Vodafone's stake in Vodacom from 65% to 70%.

"The proposed transaction presents a unique opportunity to acquire a significant strategic interest in the premier telecom operator in East Africa", said Vodacom. Vodafone will subscribe for new Vodacom shares, and its interest in Vodacom will rise to 70% from 65% now. Vodafone will retain a 12.5% interest in Vodafone Kenya, and about a 5% interest in Safaricom, after completion of the proposed transaction. The transaction is not expected to have a material impact on Vodafone Group's free cash flow or its earnings.

For Vodacom, which also has networks in Tanzania, Democratic Republic of Congo, Mozambique and Lesotho, the transaction takes it into a market where Safaricom has a 71 percent share and demand is still growing for mobile services, including M-Pesa.

"While the transaction will give Vodacom a foothold in Kenya, it will also increase Vodafone's stake in the South African firm from the current 65 per cent to 70 per cent" the United Kingdom giant said in the statement.

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"While Safaricom share-- in some segments remain high, we firmly believe this has been attained through prudence investment and continuous innovation, both of which are integral to our strategy", Collymore said on May 10.

Listed on the Nairobi Securities Exchange and with annual revenues in excess of Kshs 200 Billion, Safaricom invested Kshs 38 billion in building its network past year, providing over 80% of Kenya's population with 4G, 3G and 2G coverage. He added that he hopes the closer cooperation between the two companies will help drive the adoption of M-Pesa in Vodacom's other markets.

Its interest in Safaricom will contribute approximately 15% of its earnings (before amortisation for the fair value adjustment of assets on acquisition) based on Vodacom Group's net profits as reported in its preliminary results for the year ended 31 March 2017. Vodacom scrapped the service in South Africa altogether previous year amid poor uptake by consumers.

It will also help increase the use of Safaricom's popular M-Pesa money transfer service across Africa.

Valuation of Safaricom shares, that will go to Vodacom, is based on the Kenyan firm's share price on Friday last week.

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