UK-based Vodafone Plc has agreed to transfer a 35 per cent stake in Kenyan telco Safaricom to its majority-owned South African subsidiary Vodacom Group Plc.
The transfer -announced on Monday- will see Vodafone, through its fully owned subsidiary Vodafone International Holdings, give up 35 per cent of its total 40 per cent stake in Safaricom in return for new ordinary shares in Vodacom. Vodafone Plc currently controls a 65 per cent stake in Vodacom--South Africa's largest mobile operator.
Put roots down
Safaricom Chief executive officer Bob Collymore believes the new deal will help the firm in expanding its mobile money services M-Pesa, which has already put roots down in 10 countries.
"The agreement will ensure Safaricom continues to have strong Kenyan representation at Board and management levels, and promotes the continued successful expansion of the company as well as the opportunity to drive M-Pesa to other markets in the continent," he said.
Last week, Safaricom announced a 27.1 per cent growth in net profit for the full year ended March 31, 2017 to Sh 48.1 billion ($481 million), boosted by a strong growth earnings from its Mobile money service.
Revenues from M-Pesa registered a 32.7 per cent jump per cent to Sh55.1 billion ($551 million)
The transfer does not affect Safaricom's shareholding structure. Vodafone remains the Kenyan telco's largest shareholder controlling 40 per cent, the Kenyan government controls 35 per cent while the rest is held through free float.
The agreement gives the UK based telecommunications multinational control over two of Africa's largest mobile operators, Safaricom and Vodacom.
Safaricom's market share in the Kenyan market rose to 71.2 per cent, according to 2016 second quarter statistics report by the Communication Authority of Kenya (CAK).
Safaricom has been under pressure from lawmakers and regulators motivated by sustained calls from competitors to have it declared a dominant player.