South African telecommunications giant Vodacom is in the process of acquiring a majority stake in Kenya’s largest company and major East African telecoms firm, Safaricom.
The announcement was made on Monday, with a proposed 34.94 percent indirect stake set to be bought from the Kenyan government.
The stake is worth 284 billion Kenyan shillings or around $2.76 billion, based on Safaricom’s current share price on the Nairobi Securities Exchange, according to Fin24.
The agreement will see Vodacom acquire 87.5% of the issued share capital of Vodafone Kenya Limited, and Vodafone will subscribe for new Vodacom Group shares.
Ownership of Safaricom is currently split between the government of Kenya (35%), Vodafone Kenya (39.93%), public investors (25%) and Safaricom employees (0.07%), so once the acquisition is finalised, Vodacom, with 65 percent of its own company owned by Vodafone International, would become a majority stakeholder.
After recent deals in India and the Netherlands for Vodafone International, Vodacom’s Safaricom acquisition provides the English-based firm with a second market-leader within the African region, after Vodacom in South Africa.
Commenting on the details of the deal, a Vodacom statement outlined the strategic advantages of such an acquisition.
“The proposed transaction presents a unique opportunity to acquire a significant strategic interest in the premier telecom operator in East Africa,” said Vodacom.
“Following the proposed transaction, Vodacom Group will occupy a leading position in its markets with approximately one third of sub-Saharan Africa’s gross domestic product,” the South African telecoms provider added.
Vodacom also expressed their desire 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.”
Vodacom’s full-year profit rose from last year, thanks in part by strong customer additions as the mobile operator welcomed three million new subscribers in South Africa.
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.