Vodafone To Transfer 35% Stake In Safaricom To Vodacom

Reuters

The 34.6 billion-rand ($2.6 billion) deal, structured as an acquisition of the stake by Vodacom in return for new shares, is the latest move by Vodafone's chief executive Vittorio Colao to rationalise the group's disparate portfolio of interests around the world.

Customers increased by 8.6% to 37.1 million, with 3.0 million customer net additions, as our segmentation and bundle strategy continued to attract new customers, South Africa's largest mobile operator said.

All this will leave Vodafone with a raised 70% stake in Vodacom, and a much reduced 5% stake in Safaricom.

For the year, group Ebitda - a measure of operating performance - grew by 2,9% to R31,2m, up 7,1% (excluding the impact of currency fluctuations), with margins improving by 0,5 percentage points to 38,4%. This represents a 5.9 percent discount to the Safaricom share price on the Nairobi Securities Exchange at closing ahead of the announcement. Vodafone has committed to Vodacom that, if required, it will sell down a portion of its shareholding in Vodacom before the exemption expires.

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"The transaction is expected to close in the third quarter of the 2017 calendar year", said a notice published on Vodafone PLC's site yesterday.

Vodafone Group is one of the world's largest telecommunications companies and provides a range of services including voice, messaging, data and fixed communications.

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. The Kenyan government will retain its 35% stake in Safaricom. The company benefits from well-invested state-of-the-art infrastructure and is the only operator with a nation-wide network which now provides 3G and 4G coverage to 85% and 25% of the population respectively. Safaricom has harnessed its proprietary fibre infrastructure to build a dedicated enterprise business, providing managed IT services to clients in the East African region, as well as to deliver fibre to homes country-wide.

Safaricom made a success of M-Pesa in Kenya whereas Vodacom's launch of M-Pesa in Tanzania in 2008 and South Africa in 2010 disappointed. Fuelled by expanding distribution channels and the expansion of products and services on offer, we increased the number of customers that use M-Pesa by 3.7 million to nearly 13 million, contributing to a 19.4% rise in M-Pesa revenue.

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