Safaricom is looking at expanding its services across Africa following a deal in which Vodafone is to transfer part of its indirect interest in Safaricom to Vodacom.
Following the announcement, Safaricom CEO Bob Collymore said Vodafone had assured the Kenyan government that the deal “promotes the continued successful expansion of the company as well as the opportunity to drive M-PESA to other markets in the continent.”
M-Pesa is already in 10 other countries and this deal will push it new markets under Vodacom’s large footprint across Africa from South Africa, Lesotho, Zambia, Angola, Mozambique, DR Congo, Tanzania to Cameroon, Nigeria Ivory Coast and Sierra Leone.
With newer and near-virgin markets for mobile money transfer services, Safaricom will have investments to pump in the billions of shillings it’s earns in annual revenues.
Vodafone, meanwhile, has assured the Kenya government that Safaricom would continue to have a strong representation in the board and management levels, said Collymore.
Under the terms of the agreement, Vodafone will exchange a 35% indirect interest in Safaricom for new ordinary Vodacom shares and will continue to hold a 5% indirect interest in Safaricom, in addition to the interest held through Vodacom.
Vodacom said on Monday it would buy the 35% stake in Safaricom from its parent company Vodafone for Ksh269billion ($2.59 billion), expanding its reach to the high growth Kenyan market. Safaricom, which is 40% owned by Britain’s Vodafone and 35% by Kenya’s government, has the largest subscriber base in its home market and dominates the thriving mobile financial services sector through its M-Pesa platform.
Kenya is one of the largest and most advanced economies in east and central Africa that has made significant strides in technological innovation.
Vodafone will retain a 12.5 percent interest in Vodafone Kenya, equivalent to 5 percent interest in Safaricom, after completion of the proposed transaction, the company said.
Completion of the transaction is subject to a number of conditions, including approvals from Vodacom minority shareholders and the Financial Surveillance Department of the South African Reserve Bank as well as confirmation from the Kenya Capital Markets Authority that the Transaction does not trigger an obligation for Vodacom to make a mandatory bid for Safaricom.