Vodafone transfers part of Safaricom stake to Vodacom

Vodafone said it had agreed to transfer 35% of its indirect shareholding in Safaricom to Vodacom Group, its sub-Saharan African subsidiary, for 226.8m new Vodacom shares.

The transaction, which has a value of €2.4bn based on Vodacom's closing share price on May 12, will increase Vodafone's ownership in Vodacom to 70% from 65%.

Vodafone said the deal “streamlines and simplifies the management of its sub-Saharan African holdings”.

Vodafone will continue to hold a 5% indirect interest in Safaricom following the transfer, in addition to the indirect interest held through Vodacom.

After the transaction, Vodafone will continue to report its direct and indirect holdings in Safaricom under the equity method. The transaction is not expected to have a material impact its free cash flow or its earnings.

Vodacom has secured a two year exemption from the 20% free float requirement from the Johannesburg Stock Exchange as it will be at 18% after completion of the deal.

Vodafone has committed to Vodacom that it will sell down a portion of its shareholding in Vodacom before the exemption expires if required.