Uk based telecoms giant, Vodafone, is transferring 35% of its stake in Kenyan-based mobile operator Safaricom to its listed South African company, Vodacom.
Based on the agreed terms of the transaction, Vodafone will be exchanging the 35% indirect interest in Safaricom for 226.8 million new ordinary Vodacom shares. The transaction, which has a value of €2,361 million based on Vodacom’s closing share price on Friday 12 May 2017, will increase Vodafone’s ownership in Vodacom from 65% to 70%. Vodafone will continue to hold a 5% indirect interest in Safaricom following the transfer, in addition to the indirect interest held through Vodacom.
According to Vodafone, the transaction is expected to generate clear benefits for Safaricom, Vodacom and Vodafone Group:
- Vodafone Group streamlines and simplifies the management of its sub-Saharan African holdings;
- Strengthens alignment and cooperation between Safaricom and Vodacom and provides greater scope to share talent and expertise across the region as well as internationally; and
- Vodacom gains exposure to the attractive Kenyan market and one of the most successful and innovative telecoms companies in Africa, further enhancing its investment case and strategic position.
Vodafone still owns two other assets in Sub-Saharan Africa apart from Safaricom in Kenya – Ghana and Egypt while Vodacom owns networks in 34 African countries. Financial Times reports that a Vodafone spokesman said there were no plans to transfer the Ghana or Egypt businesses to Vodacom.
Financial Times opines that this is part of Vodafone CEO, Vittorio Colao’s plan to reorganise its portfolio of global assets. It adds that the company’s emerging market assets have been seen as an impediment to a sale or merger of the business, with potential partners only interested in its European footprint. Some argue that the African roll-up could be a precursor to a long-mooted merger with Liberty Global, owner of Virgin Media, in Europe.
