Go-ahead for R35bn Vo­da­com Kenya deal

The Star Early Edition - - BUSINESS REPORT - Dineo Faku

THE PUBLIC In­vest­ment Cor­po­ra­tion (PIC) has given the Vo­da­com Group the green light to make the R35 bil­lion ac­qui­si­tion of Sa­fari­com, Kenya’s big­gest mo­bile op­er­a­tor.

The PIC, which man­ages al­most R2 tril­lion of public ser­vants’ pen­sion, and in­cludes the Gov­ern­ment Em­ploy­ees Pen­sion Fund, holds a 15.63 per­cent in­ter­est in the 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 said on Fri­day.

Vo­da­com, which op­er­ates in coun­tries in­clud­ing Tan­za­nia, Le­sotho and South Africa, said last month that Safricom’s lead­ing mo­bile money plat­form, M-Pesa, was an im­por­tant driver of Kenyan eco­nomic growth, and pro­vided es­sen­tial fi­nan­cial ser­vices to more than 19 mil­lion cus­tomers.

In re­cent years, mo­bile net­work providers have taken steps to ex­pand more into fi­nan­cial ser­vices to im­prove rev­enue as voice and SMS rev­enue con­tin­ued to de­cline.

The ex­pan­sion was through money plat­forms like M-Pesa, a mo­bile money busi­ness, e-wal­lets and cross bor­der pay­ment op­tions among oth­ers.

In­creas­ing growth

Vo­da­com, which is ma­jor­ity owned by Bri­tish based Voda­fone, said last month that the deal would help boost its pres­ence in the east African mar­ket, jointly in­creas­ing the com­pany’s growth in fi­nan­cial ser­vices cus­tomers to 32 mil­lion. Its M-Pesa op­er­a­tion was a strong rev­enue driver for its in­ter­na­tional op­er­a­tions and it had seen a 15.4 per­cent growth in ac­tive cus­tomers to 9.2 mil­lion, fu­elled by ex­pan­sion in its dis­tri­bu­tion chan­nel and a grow­ing ecosys­tem, it said in its 2016 an­nual re­port.

M-Pesa con­trib­uted 8.9 per­cent of in­ter­na­tional rev­enue, with R13.6bn moved through the sys­tem monthly, the com­pany said in its an­nual re­port for 2016. How­ever, it shut its M-Pesa ser­vice of­fer­ing in South Africa last year be­cause of slow growth, due to the very high bank­ing pen­e­tra­tion, the reg­u­la­tory en­vi­ron­ment, and chal­lenges in dis­tri­bu­tion.

MTN, Africa’s big­gest mo­bile net­work, also pulled the plug on M-Pesa in South Africa last year cit­ing that it was not vi­able in the coun­try.

Vo­da­com shares rose 1.57 per­cent on the JSE on Fri­day to close at R166.29.

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