Vodafone signs deal to spread M-Pesa in Africa amid split calls

Bryan Strickland
May 16, 2017

Subject to regulatory and shareholder approvals, Vodacom will fund the acquisition of a 34.94-percent stake in Safaricom by issuing 226.8 million new ordinary shares.

Vodafone will retain a 5% stake in the Kenyan telecoms giant.

For the year, group Ebitda - a measure of operating performance - grew by 2,9% to R31,2m, up 7,1% (excluding the impact of currency fluctuations), with margins improving by 0,5 percentage points to 38,4%.

Under the deal Vodacom said it will acquire a 87.5 percent shareholding in Vodafone Kenya, equivalent to a 35 percent indirect interest in Safaricom, in return for issuing 226.8 million new shares to Vodafone, raising the British company's stake in Vodacom from 65 percent now to 69.6 percent.

Following the transaction, Vodafone Group will continue to report its direct and indirect holdings in Safaricom under the equity method. "This represents a 5.9% discount to the Safaricom share price on the Nairobi Securities Exchange at closing ahead of the announcement", Vodacom said.

Safaricom CEO Bob Collymore said in a statement that the transaction is set to further enhance its position as a leading African mobile communication company.

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Following the conclusion of the transaction, Vodacom will be entitled to appoint three directors to the board. Vodacom has appointed an independent expert, Deloitte & Touche to provide a fairness opinion on the proposed transaction which will be included in the circular to be distributed to Vodacom shareholders on or about July 5 2017 with the general meeting to approve the reorganisation expected to take place on or about August 15 2017. Vodafone Group has mobile operations in 26 countries, partners with mobile networks in 48 more, and fixed broadband operations in 17 markets.

In operational terms, the group - which has operations in South Africa, Tanzania, the Democratic Republic of the Congo (DRC), Lesotho and Mozambique - closed out past year with more than 66.786 million subscribers, up 8.9% on an annualised basis.

The company also detailed the strength of its network, following continued investment in infrastructure and the expansion of its LTE network to cover 75.8% of the population.

M-Pesa, launched 10 years ago in Kenya by Safaricom, lets people without bank accounts use their mobile phones to transfer money.

The agreement has been reached amid simmering debate over proposed separation of the globally successful M-Pesa from Safaricom.

Other reports by GlobalViralNews

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