Vodacom bets on legal victory in Kenya as Safaricom strengthens earnings
Vodacom Group is maintaining confidence that it will overturn a Kenyan High Court ruling invalidating its acquisition of an additional 15% stake in Safaricom, even as the Kenyan telecommunications company delivers stronger financial results that reinforce the strategic value of the investment.
By Markets·
South Africa’s Vodacom Group said it was confident of succeeding in its bid to overturn a Kenyan court order to hand a 15% stake in Safaricom back to the state, as the unit helped boost first-half earnings by more than a quarter.
Vodacom raised its holding in Kenya’s biggest telecoms operator to 55% in a $1.6 billion deal completed in June, but in September Kenya’s High Court said the sale did not adequately involve the public, and material information had been concealed.
It ordered the 15% holding returned to the government. Both Vodacom and the government of Kenya are appealing the ruling.
The Court of Appeal in Nairobi is fast-tracking the appeal and has ordered that the prevailing status quo be maintained meaning Vodacom remains the registered holder of the Safaricom shares acquired.
Vodacom has positioned financial services as a major growth driver. Safaricom helped lift Vodacom’s headline earnings per share to 5.87 rand in the six months ended September 30 from 4.67 rand a year earlier.
Service revenue grew 29% to 85.1 billion rand ($5.20 billion) and increased 13% on a pro forma basis, which includes Safaricom in the comparative period. Financial services revenue surged 99% to 15.9 billion rand, up 19% on a pro forma basis.
The group, which processes $575 billion in transactions, is expanding products including lending, investments and merchant services across its markets, while seeking to replicate M-Pesa’s success in Kenya and Tanzania elsewhere in Africa.