Johannesburg - Vodafone Group is simplifying its holdings in
sub-Saharan Africa, selling a $2.6 billion stake in Kenya’s Safaricom Ltd. to
its majority-owned Vodacom Group Ltd.
The all-share deal will transfer a 35 percent stake in
Safaricom to Vodacom in return for stock in the Johannesburg-based unit,
raising the parent’s stake in its South African business to about 70 percent.
Bloomberg News reported the deal on Sunday.
The transaction gives Vodacom greater access to products
such as M-Pesa, Safaricom’s fast-growing mobile-banking service. It also
concentrates Vodafone’s African holdings more fully into Vodacom, simplifying
management and continuing a push by the Newbury, England-based parent to tidy
up its developing-markets investments.
“It’s a big step in terms of commitment of Vodafone to
Vodacom,” the South African company’s chief executive officer, Shameel
Joosub, said on a call with reporters. “Selling the asset to us does show, at
least in east and southern Africa, that the assets are all under Vodacom.”
Vodafone’s only other standalone business in sub-Saharan
Africa is in Ghana, and there have yet to be discussions between the two
companies about that unit, Joosub said.
Kenya Leader
Vodacom will issue 226.8 million new shares to its parent
company for the stake, Vodafone said in a statement on Monday. The UK company
will retain a 5 percent holding in Nairobi-based Safaricom, Kenya’s biggest
company, while the East African country’s government will keep 35 percent.
Safaricom is the market leader in Kenya with 71 percent 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.
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.
Vodacom and Safaricom “jointly want to grow the M-Pesa
business in the continent,” Joosub said. This deal “is a very strong M-Pesa play
because it makes you the biggest financial services player in Africa,” he said.
Read also: Barclays to begin Africa sale with 10% stake offer
Vodacom shares rose 1.2 percent to 154.24 rand as of 9:38
a.m. in Johannesburg, valuing the company at 230 billion rand ($17.3 billion).
Safaricom was little changed in Nairobi.
Vodacom also said Monday that full-year earnings per
share excluding one-time items increased 4.5 percent to 9.23 rand, broadly in
line with estimates. Sales rose 1.5 percent to 81.3 billion rand.
The company raised three-year targets for service revenue to
mid-single digit percent growth from low-to-mid single digits and earnings
before interest and taxes to a mid-to-high single digit increase.