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Johannesburg - Telecommunications giant Vodacom has set its sight firmly on east Africa with the purchase of a 34.94 percent stake in Safaricom for R35 billion targeted to increase its footprint in the region.

Vodacom said the purchase would give it an edge on Safaricom’s successful M-Pesa offering East Africa while cementing its grip on its home market for the year ended March.

Vodacom, which is majority owned by British based Vodafone, yesterday said that the deal with Safaricom would make it a dominant player in the region and provide it with access to an additional 28.1 million customers.

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Shameel Joosub, Vodacom group chief executive, said the deal would create further incremental value through close co-operation, particularly in driving M-Pesa adoption across its operations.

“This is an exciting occasion for Vodacom and a unique opportunity to diversify our revenue growth and profitability,” Joosub said. “Acquiring a strategic stake in Safaricom will provide our shareholders with access to a high growth, high margin, and high cash generation business operating in a high growth market.”

Vodacom is to fund the acquisition by issuing 226.8 million new ordinary shares. Under the terms of the deal Vodacom will transfer a 35 percent stake in Safaricom to its Johannesburg-based unit, getting stock in return that raises its Vodacom stake to about 70 percent.

M-Pesa is a mobile phone-based money transfer, financing and microfinancing service that was launched in 2007 by Vodafone for Safaricom and Vodacom.

Vodacom shares rose 0.24 percent on the JSE on Monday to close at R152.86.