By David Herbling.
Vodacom Group, South Africa’s biggest mobile operator, agreed to take control of East Africa’s largest telecommunications provider Safaricom Plc in a deal valued at about $2.4 billion (R36 billion). Safaricom’s stock surged.
Vodacom agreed to buy 15% of Safaricom from the Kenyan government, along with an effective 5% stake in the company from Vodafone International Holdings BV, for $2.1 billion, according to a stock-exchange filing on Thursday. It will also pay an additional R5.3 billion ($310 million) upfront for the right to receive future Safaricom dividends that would have gone to the Kenyan government.
The plan to increase its stake, first reported by Bloomberg last month, will bring Vodacom’s shareholding to 54.9%, the company said.
The acquisition will boost earnings from Vodacom’s operations outside its domestic market, where the company faces increasing competition, and give it control of one of the largest and fastest-growing mobile money assets through Safaricom’s M-Pesa unit. For Kenya’s government, the deal raises cash needed to rein in rising debt costs and a widening budget deficit without having to raise taxes.
The deal is “a good strategic move for the long term,” said Peter Takaendesa, portfolio manager at Mergence Investment Managers. “Safaricom is an attractive asset given its dominant market positions in both the mobile and tech markets in Kenya. It will also go a long way in reducing the contribution of South Africa operations that are likely to be challenging over at least the mid-term as competition in the prepaid market intensifies.”
Safaricom shares, which have added 65% since the start of the year, jumped 13% at the start of trade in Nairobi.
Sovereign wealth
Part of the government’s rationale for selling the stake in Safaricom, which has a current market value of $8.7 billion, is to unlock seed capital for infrastructure and sovereign-wealth funds being established by the government, Treasury Secretary John Mbadi said Thursday. The state will retain a 20% stake in Safaricom after the transaction has been completed.
“We don’t have fiscal space to borrow for infrastructure,” he told reporters in the capital, Nairobi. “We must be creative and innovative. We are creating a pool of resources to implement projects without taking more loans and increasing taxes.”
Kenyan President William Ruto estimates the nation requires 5 trillion shillings ($38.6 billion) in infrastructure spending to transform the economy. The government’s plans to raise cash include privatizing a state-owned pipeline operator to raise as much as $1.2 billion in the first quarter of 2026.
To finance the deal, Vodacom will raise funding through loan agreements with Vodafone and an externally sourced Kenyan-shilling facility guaranteed by Vodacom, according to the statement.
“The acquisition will consolidate Vodacom’s capabilities in mobile payments, lending and digital wallets, supporting its broader financial inclusion strategy across the region,” the company said.
© 2025 Bloomberg.