Vodacom has taken control of East Africa’s largest mobile operator, Safaricom, in a R36bn deal that further strengthens its place as a major player on the African continent.
Through the deal, the JSE-listed cellphone provider will also take control of the continent’s best-known mobile money business, M-Pesa. In addition, it fully adds Ethiopia, in addition to Egypt, as another high-growth potential market for the group.
Until now Vodacom has held a 35% stake in the Kenyan-listed company, which contributes about 10% to its group earnings.
The group is set to acquire a 15% shareholding in Safaricom from the Kenyan government and a 5% shareholding from Vodafone, increasing its stake to 55% for $2.1bn (R35.5bn).
Vodacom will acquire 12.5% of the issued shares in Vodafone Kenya — an effective 5% stake in Safaricom — from Vodafone International Holdings for $500m, resulting in its owning 100% of Vodafone Kenya.
The second part of the transaction involves Vodacom, via Vodafone Kenya, acquiring 15% of Safaricom from the Kenyan government for $1.6bn.
Safaricom, the market leader in Kenya, was established in 1997 and listed on the Nairobi Securities Exchange with a market capitalisation of R151bn. Its fintech business, M-Pesa, facilitates more than 100-million daily transactions, with 38-million M-Pesa customers in Kenya. The company is also the majority shareholder in Safaricom Ethiopia, the new mobile operator in Ethiopia, which has already attracted more than 11-million customers.
After the acquisition, the shareholders in Safaricom will be Vodacom (55%) and the Kenyan government (20%), with the rest held by public investors on the Nairobi Securities Exchange..
Vodacom said the acquisition will consolidate its capabilities in mobile payments, lending and digital wallets, supporting its broader financial inclusion strategy across the region.
“This landmark transaction will mark a pivotal step in Vodacom’s journey to accelerate growth and deepen our impact across Africa,” said Vodacom CEO Shameel Joosub.
“Acquiring a controlling stake in Safaricom strengthens our position as a market leader, while at the same time unlocks new opportunities to drive digital and financial inclusion at scale in Kenya and Ethiopia,” he said.
“Vodacom and its board of directors are confident in Safaricom’s compelling investment case and its ability to complement Vodacom’s growth potential and Vision 2030 objectives,” the group said.
The acquisition will be funded through new term facilities, and Vodacom intends to raise funding through debt term facilities with Vodafone.
Safaricom, valued at 1.14-trillion Kenyan shillings ($8.8bn), has been on a huge growth path. It achieved revenue of $3bn for the first time in the year to end-March and is celebrating operating the M-Pesa mobile money service for 18 years.
In a recent interview with Business Day, Safaricom CEO Peter Ndegwa said Kenya continues to be the group’s biggest earner, but he expects that the recent entry into Ethiopia will be a big source of growth.
He attributes a large part of the group’s performance in Kenya to M-Pesa, particularly around small businesses and the technology ecosystem that the service has created.
The acquisition is subject to approvals from certain regulatory and governmental authorities in Kenya, Ethiopia and South Africa.
Vodacom’s share price closed Thursday 0.67% weaker at R132.38, giving it a market cap of R275bn.
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