Vodacom agrees $2.6 bln Safaricom deal to tap Kenyan market

Vodacom agrees $2.6 bln Safaricom deal to tap Kenyan market

Kenya's government owns 35% of Safaricom, while public investors and Safaricom employees hold 25% and 0.07% respectively.

Based on Friday's JSE closing price of R152,49 per Vodacom share, the proposed transaction is worth R34,6bn.

Vodacom's interest in Safaricom proportionally equates to approximately 12.6% of the Group's reported service revenue as announced in its latest year-end results.

Vodacom Group Ltd. agreed to buy a 35% shareholding in Safaricom Ltd. from its parent company Vodafone Group Plc, giving the South African wireless operator a foothold in the Kenyan market. Safaricom is the market leader in Kenya with a 71 percent mobile-customer market share, and is under pressure from lawmakers and regulators who are debating whether it has a dominant position in the market. Ebitda is a measure of operating performance.

"Kenya has a mobile penetration of 88%, which is well below SA's mobile penetration of 146%", Vodacom said. It also has an emerging urban middle class with an appetite for high-value goods and services, Vodacom said.

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Vodacom's data revenue was up 16.4% during the 12 months under review.

The deal will give Vodacom closer access to Safaricom's money platform, M-Pesa, which has more than 19m monthly active customers and which forms an important component of the Kenyan economy. The transaction provides a large level of diversification in a single transaction and Safaricom is highly complementary to Vodacom Group's existing footprint.

The combination with Vodacom "promotes the continued successful expansion of the company as well as the opportunity to drive M-Pesa to other markets in the continent", CEO Bob Collymore said in an emailed statement. Its interest in Safaricom will contribute about 15% of its earnings (before amortisation for the fair value adjustment of assets on acquisition) based on its 2017 full-year results.

The company said the transaction is set to further enhance it as a leading African mobile communication company. Vodafone will subscribe for new Vodacom shares, and its interest in Vodacom will rise to 70% from 65% now.

The company declared a second-half dividend of 4.35 rand a share, making the total dividend for the year 8.30 rand a share.

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