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Home Corporate News

Vodacom to Buy More Stake in Safaricom Telecommunications Ethiopia

Leah Wamugu by Leah Wamugu
in Corporate News
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Safaricom Plc

Safaricom CEO Peter Ndegwa

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Vodacom Group has signed a deal that could see it buy an additional 10.9 per cent stake in Safaricom Telecommunications Ethiopia from the UK’s sovereign wealth fund CDC Group at a cost of $1.74 billion (Kes 191.2 billion) in the coming years.

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“As part of the transaction agreements, Vodacom has granted a put option on the shares held by the CDC Group in the holding company to facilitate CDC Group’s potential exit in the investment. CDC Group can only put the shares at fair market value (the total exposure of the put option is capped at $1,740 million (Kes 191.2 billion), representing 10 percent of Vodacom’s current market capitalisation) from year 8 to year 10 from the year of commencement of commercial operations of the Ethiopia operating company.” Vodacom said in a trading update.

Currently, Vodacom owns a 6.2 % stake in the Ethiopian firm through the Netherlands-registered investment vehicle Vodafamily Ethiopia Holding Company. The deal, if completed, will raise the its interest in the newly formed telco to 17.1 %.

The multinational also holds a 35 per cent stake in Kenya’s Safaricom Plc –the majority shareholder in the Ethiopian business with a 55.7 per cent equity.

The other shareholder in the venture is Japan’s conglomerate Sumitomo Corporation with a 27.2 % stake. Vodafone Plc, which has stakes in Safaricom and Vodacom, has a nominal interest in the Ethiopian business.

The consortium members on September 10 signed agreements to fund the new venture.

“Vodacom’s commitment to fund Ethiopia Opco is limited to its pro-rata beneficial shareholding of 6.2 per cent, which is not expected to be material. Safaricom, as the lead member of the consortium, intends to provide additional disclosure on the funding of the Ethiopia operating company in the coming months.” the telecommunication giant.

The deal signals Vodacom’s confidence that the Ethiopian operation will be successful, indicating that the telco could be worth as much as Kes 1.7 trillion in a decade.

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Read also; Safaricom Telecommunications Ethiopia PLC Gears Up for Commercial Launch

 

 

 

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