Government offloads 15% stake in Safaricom to Vodacom for Ksh.245 billion

The government is planning to offload a 15% stake in Safaricom to Vodacom Group Limited, valued at Ksh.244.5 billion, the teleco has announced.

The stake, equivalent to 6,009,814,200 ordinary shares, each sold at Ksh.34 each, will see the State’s retained ownership in Safaricom decreasing from 35% to 20%.

Vodacom has also agreed to pay the government an upfront payment of approximately Ksh.40.1 billion for the right to receive Ksh.55.7 billion in future Safaricom dividends that would have accrued to the government on its remaining stake.

This allows the Treasury to monetise its income streams upfront.

In addition to the government’s stake, Vodacom will acquire a 5% interest from Vodafone International Holdings, raising its total shareholding in Safaricom from 35% to 55%, giving it majority control for the first time since Safaricom's listing in 2008.

The transaction will now see Vodacom’s financial reporting making major shifts, as Safaricom's financial results will transition from being accounted for as an associate to being fully consolidated into the Vodacom Group's results.

This is expected to significantly boost Vodacom’s reported revenue towards Ksh.1.6 trillion.

The transaction effectively grants the South African telecommunications giant controlling majority ownership of East Africa’s most profitable company.

The deal involves two key movements that reshape Safaricom’s ownership structure:

However, the acquisition is conditional on securing all requisite approvals from regulatory and governmental authorities in Kenya, South Africa and Ethiopia, where Safaricom recently launched a new operation.

Kenya’s Capital Market Authority (CMA) needs to confirm that Vodacom is exempt from making a mandatory takeover offer to minority shareholders.