Vodacom gains PIC backing for Safaricom buy

Vodacom. (Duncan Alfreds, Fin24)
Vodacom. (Duncan Alfreds, Fin24)

Cape Town – Vodacom’s shareholder the Public Investment Corporation (PIC) has given its support for it to buy a 34.94% stake in Safaricom, giving the wireless operator majority control of Kenya’s biggest company.

The PIC, which manages the Government Employees Pension Fund, holds a 15.63% interest in Vodacom Group.

“In its letter of support, the PIC has undertaken to vote in favour of the resolutions required to implement the proposed transaction at the general meeting to be convened by Vodacom Group,” Vodacom  [JSE:VOD] said in a statement on Friday.

Vodacom, 65% owned by the UK mobile-phone company Vodafone, said the proposed transaction presents a unique opportunity to acquire a significant strategic interest in the premier telecom operator in East Africa.

The stake is owned by the Kenyan government and is valued at 284 billion shillings (R36.7bn), based on Safaricom’s current share price. Vodafone already owns almost 40% of the Kenyan company directly.

"Safaricom is owned by the government of Kenya (35%), Vodafone Kenya (39.93%), public investors (25%) and Safaricom employees (0.07%)," Vodacom said on Monday.

The acquisition gives Newbury, England-based Vodafone control of two of Africa’s biggest mobile-phone companies, the market leaders in their respective home markets, and follows deals in India and the Netherlands. For its part, Nairobi-based Safaricom is under pressure from lawmakers and regulators because of its dominant position in the market, and is facing calls to split.

Vodacom's headline earnings per share rose by 4.5% for the year ended 31 March 2017. Revenue was up 2.3%, while Ebita grew 2.9%, it announced on 15 May 2017. Its share price edged higher by 0.17% on Friday at 12:23, trading at R164 a share.

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