Vodacom to buy Vodafone’s 35pc stake in Safaricom

South Africa’s Vodacom Group Ltd. (JSE:VOD) announced plans on Monday to buy a 35 percent stake from parent company Vodafone’s (LON:VOD) Safaricom. The stake will cost Vodacom 34.6 billion rands (($2.59 billion) and will extend their reach into Kenya.

Safaricom is currently owned by the Kenyan government (35 percent) and Vodafone (40 percent). It is the most popular mobile network in Kenya, with the largest subscriber platform and its M-Pesa platform.

“This is an exciting occasion for Vodacom and 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.” said Shameel Joosub, Vodacom’s Group Chief Executive Officer Shameel Joosub.

“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.”

M-Pesa is “an important driver of Kenyan economic growth” Joosub says “the proposed transaction will improve Vodacom Group’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”.

“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.” he added.

This deal will see a reduction in its African market. It will continue to have a 12.5 percent interest in Vodafone Kenya, equivalent to five percent interest in Safaricom.

Shares in Vodacom rose 0.2 percent on Friday to 152.49 rand. The company is valued at 227 billion rand ($17 billion).

Vodacom also said on Monday that full-year earnings per share increased by 4.5 percent to 9.23 rand, which are in line with estimates. Sales rose 1.5 percent to 81.3 billion rand.