Safaricom is planning to expand M-Pesa mobile money across Africa

16 May, 2017, 10:15 | Author: Kelly Sanders
  • Reuters

Vodacom Group announces today that it has agreed terms to acquire a strategic stake in Kenya's Safaricom held by Vodafone Group plc.

Under the deal, valued at R34.6 billion rand, Vodacom said it will acquire an 87.5 percent shareholding in Vodafone Kenya, representing a 35 percent indirect interest in Safaricom, in return for issuing 226.8 million new shares to Vodafone, raising the British company's stake from 65 percent now to 69.6 percent.

Vodacom, which is 65 percent owned by Vodafone, said subscribers increased by 8.6 percent to 37.1 million in South Africa, while customers in its worldwide markets rose by 2.5 million for the year ended March 31.

Vodacom is looking to further their African footprint with the recent announcement of its investment in Kenyan telecoms firm, Safaricom.

Vodacom CEO Shameel Joosub, presenting the group's 2017 financial year-end results at the JSE on Monday, explained that Safaricom offered exciting and strong ongoing growth opportunities, particularly as, with a total population of 45-million, Kenya only had a mobile penetration rate of 88%.

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"Vodacom's first attempt at a money transfer business wasn't very successful, but this deal could lead to better results", Morning Star analyst Allan Nichols said. In return, Vodafone gets 226.8M new shares, raising its Vodacom stake to 69.6% from a current 65%. Fuelled by expanding distribution channels and the expansion of products and services on offer, we increased the number of customers that use M-Pesa by 3.7 million to nearly 13 million, contributing to a 19.4% rise in M-Pesa revenue.

The deal is, however, subject to Kenya's capital markets authority's approval although Vodafone said in the statement that it has assured the government that the transaction will not affect its relationship with Safaricom. This deal "is a very strong M-Pesa play because it makes you the biggest financial services player in Africa", he said.

Shares in Vodacom rose 0.2 percent on Friday to 152.49 rand. Safaricom was little changed in Nairobi.

The company declared a second-half dividend of 4.35 rand a share, translating to a full-year dividend of 8.30 rand per share. Sales rose 1.5% to R81.3 billion.

The company raised three-year targets for service revenue to mid-single digit per cent growth from low-to-mid single digits and earnings before interest and taxes to a mid-to-high single digit increase.

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