According to reports by Forbes, Vodacom Group, the South African telecoms giant, has announced that they will spend $2.6 billion (R34,6 billion) to buy out their parent company’s (Vodafone) 34.94% stake in Kenyan operator Safaricom. The deal will see Vodacom attain a foothold in the Kenyan telecoms market.
Vodacom Group Chief Executive Officer Shameel Joosub, announced the transaction, which is subject to regulatory and shareholder approvals, in a statement to the press. Joosub said that, “This is an exciting occasion for Vodacom and a unique opportunity to diversify our revenue growth and profitability. Acquiring a strategic stake in Safaricom will provide our shareholders with access to a high growth, high margin, high cash generation business operating in a high growth market. In addition to producing mutually beneficial opportunities for growth, it will create further incremental value through the close cooperation between the two businesses, particularly in driving M-Pesa adoption across our operations.”
The deal allows Vodafone to minimize their involvement in one of it’s two main African markets, allowing their South African subsidiary to take their place.
According to Bloomberg, Safaricom makes up 71 percent of the mobile-customer market share in Kenya. The company however is under pressure from lawmakers and regulators who are debating whether it has a dominant position in the market.
Vodafone will retain a 5% stake in the Kenyan telecoms giant.