Vodacom to acquire majority stake in Kenya's Safaricom for R35.77 billion

Vodacom Group will spend about R35.77 billion ($2.1bn) to acquire a further 20% stake in Safaricom, bringing its stake to 55%, as the Kenya government moves to raise additional capital instead of raising taxes or debt.

The South African telecoms group said Thursday it will acquire 15% of the shareholding from the government of Kenya and 5% from Vodacom's parent, the UK-based Vodafone group. The deal gives Vodacom control over its biggest African market - Safaricom holds about 62 million customers, more than the 46.1 million customers Vodacom holds in South Africa, and roughly the same size of the group's 51 million customers in Egypt.

The deal attracted widespread comment on social media. On "X", Lawrence Kitema (@Lawrencekitema) said it would result in the Kenya government immediately benefiting from a $1.89bn inflow and "this landmark transaction provides Kenya with fiscal breathing room amid debt-repayment pressures and tight budget conditions, while retaining a 20% ownership in East Africa's most profitable company…"

Manoti (@MwendiaJnr) said: "The government's bold decision to sell its 15% stake in Safaricom… is timely and great for the company and Kenya's economy. Vodacom is a trusted, long-term investor with deep African experience, massive capital strength, leadership in digital infrastructure and a proven record in innovation and financial inclusion."

Mwango Capital (@MwangoCapital) wrote: "Vodacom is paying KES34 per share for the government of Kenya stake. That's a 20.6% premium to today's KES28.20 close, 18.4% above the 90-day VWAP & 33.9% above the 180-day VWAP. With that kind of premium, expect Safaricom's share price to shoot up tomorrow."

Vodacom intends to raise funding for the share purchases on attractive commercial terms, through debt term facilities with Vodafone.

Vodacom said Safaricom's growth outlook is complementary to Vodacom's Vision 2030 growth objectives.

"This transaction will mark a pivotal step in Vodacom's journey to accelerate growth and deepen our impact across Africa. Acquiring a controlling stake in Safaricom strengthens our position as a market leader, while at the same time unlocks new opportunities to drive digital and financial inclusion at scale in Kenya and Ethiopia," said Vodacom's CEO Shameel Joosub in a statement.

Government of Kenya National Treasury Cabinet Secretary John Mbadi said in a statement the transaction was one of the first steps in their President's agenda of "innovatively unlocking capital, without increasing taxes or the debt burden," and "to allow additional investment in critical infrastructure to support future growth."

In terms of the mechanics of the transaction, Vodacom has agreed to acquire 12.5% of the shares in Vodafone Kenya, an effective 5% stake in Safaricom, from Vodafone International Holdings B.V. for $500 million, resulting in Vodacom owning 100% of Vodafone Kenya.

Vodacom, via Vodafone Kenya, has agreed to acquire 15% of shares of Safaricom from the Kenya government for $1.6bn. Vodafone Kenya has also agreed to buy the right to receive future Safaricom dividends amounting to KES55.7bn, that would have accrued to the government on its remaining shares in Safaricom, for an upfront payment of KES200m.

"Safaricom's outstanding track record and differentiated growth outlook perfectly complement our Vision 2030 ambitions, empowering us to deliver sustainable value for all stakeholders and to connect millions more people for a better future," said Joosub.

Vodafone Kenya, an 87.5%-owned subsidiary of Vodacom, holds as its only asset a 39.9% stake in Safaricom. After this transaction, Vodafone Kenya will be a fully owned subsidiary of Vodacom that will hold a 54.9% interest in Safaricom.

Safaricom, established in 1997 and listed on the Nairobi Securities Exchange with a market capitalisation of KES1.1 trillion (R151bn), provides a range of telecommunications services, including mobile and fixed voice, SMS, data, internet and mobile money (M-Pesa) to over 62 million customers, including both consumer and enterprise. It is the market leader in Kenya, with a claimed 65% customer market share and achieving a return on capital employed exceeding 50%.

Safaricom's M-Pesa fintech business facilitates over 100 million daily transactions with 38 million M-Pesa customers in Kenya. The company is also the majority shareholder in Safaricom Ethiopia, the new mobile operator in Ethiopia, which has already attracted over 11 million customers.

After the acquisition, the shareholders in Safaricom will be: Vodacom 55%, the government of Kenya 20%, with the remaining 25% held by public investors on the Nairobi Stock Exchange.

The acquisition will consolidate Vodacom's capabilities in mobile payments, lending, and digital wallets, supporting its broader financial inclusion strategy across the region. It will allow both Vodacom and Safaricom to share best practices across both businesses, while deepening the integration of Safaricom into the Vodacom Group.

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