Vodacom takes over Safaricom stake from Vodafone for $2.6B

Vodacom takes over Safaricom stake from Vodafone for $2.6B

Vodacom takes over Safaricom stake from Vodafone for $2.6B

The Safaricom deal also simplifies the management of two of Vodafone's biggest money-spinners in sub-Saharan Africa and promises to speed up the roll-out across the continent of mobile money transfer service M-Pesa, which was launched by Safaricom in 2007.

The deal by Vodafone -of the United Kingdom to transfer 35 of its 40 per cent stake in Safaricom to its sub-Saharan subsidiary will help expand M-Pesa to other African countries, it emerged yesterday.

In the deal, UK's Vodafone PLC will release 35 per cent of its Safaricom stake to the South African telcom in exchange for allocation of 226.8 million new shares in the transaction valued at Sh267.4 billion.

Vodacom is obtaining a 34.94% stake in Kenya's Safaricom from its parent firm Vodafone Group.

"The proposed transaction will expose Vodacom Group to the attractive high growth Kenyan market, being one of the largest and most advanced economies in east and central Africa that has made significant strides in technological innovation", Vodacom said in a statement.

The transaction gives Vodacom greater access to products such as M-Pesa, Safaricom's fast-growing mobile-banking service.

Vodacom Group sees scope to create further value through closer cooperation between both companies, including best practice sharing; replication of Safaricom's success in M-Pesa in Vodacom Group's other territories; and the creation of new pan-African enterprise solutions in contiguous markets in East Africa.

Vodafone will retain a 12.5 percent interest in Vodafone Kenya, equivalent to 5 percent interest in Safaricom, after completion of the proposed transaction, the company said. As this is a related-party transaction, Vodafone, which now owns 65% of Vodacom, is precluded from voting on this at this meeting.

Safaricom is the market leader in Kenya with 71 per cent of the country's subscribers, and is under pressure from lawmakers and regulators who are debating ways to break its dominant position in the market. 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. Safaricom was little changed in Nairobi.

A representative for Vodafone declined to comment.

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.

Profit for the year ended March 31 rose to around $1 billion, while its revenue rose 1.5% to $6.13 billion, according to MarketWatch.

Still, Vodacom said its global operations added 2.5 million customers for the year, with worldwide data revenue up 2.3% to 4.11 billion rand, thanks to a 29% increase in customers that use data to 13 million.

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