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Safaricom loses its shareholding in Ethiopian Venture

Post by : Ann Njambuya

Safaricom and its partners in the Ethiopian venture will see their combined stake drop by up to 15.5 percent after the International Finance Corporation (IFC) announced a plan to purchase Sh19.2 billion ($160 million) worth of shares in the subsidiary.

Kenya’s biggest telco is the major shareholder in the Ethiopia venture with a stake of 55.7 percent and the entry of IFC as a shareholder could see its ownership drop to below the 50 percent mark, reducing its exposure in the populous nation.

Vodacom Group holds a 6.19 percent share of the business. Sumitomo Corporation and British International Investment (formerly CDC Group) control stakes of 27.2 percent and 10.9 percent respectively in Safaricom Telecommunication Ethiopia Plc (STE)—which is the operating arm of the venture.

The partners together paid $850 million (Sh102.2 billion) towards the licence fee.

Safaricom’s stake is set to drop to about 47.1 percent, while those of Vodacom, Sumitomo and BII would decline to 5.23 percent, 22.99 percent and 9.21 percent respectively.

IFC’s new shareholding is expected at 15.46 percent, which would make the financier the third largest owner in STE behind Sumitomo.

IFC is also expected to provide debt financing to the venture at a later date but did not specify the amount saying the package is still under discussion.

Investment

“IFC’s investment will support STE’s countrywide mobile network roll-out and help position the company to comply with the terms of its license, which outlines the requirement for a specified population and geographic coverage targets and reasonable tariffs, universal accessibility and tele density target, amongst others,” said the IFC in its disclosures.

Headquaters of safaricom and Mpesa africa and Fuliza a services that offers overdraft facilities to Kenyans. Kenyans will now be able to buy aitme using the facility something that was impossible in the past.
photo/Safaricom is the major shareholder in the Ethiopian venture with a stake of 55.7 percent.

This is not the first IFC involvement in the venture with the institution having been paid a fee of $4 million (Sh481 million) for services rendered with the entry into the new market.

ALSO READ:Micheal Joseph  opens up on why he resigned as safaricom board chairperson.

Safaricom did not disclose the services received from IFC but they could be mobilisation of loans or advisory on bidding for the licence, which was issued last year.

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