Vodafone International Holdings B.V. to transfer part of its indirect shareholding in Safaricom to its sub-Saharan African subsidiary Vodacom

LONDON, 16-May-2017 — /EuropaWire/ — Vodafone Group Plc (“Vodafone Group”) announces today that its wholly-owned subsidiary, Vodafone International Holdings B.V. (“Vodafone”), has agreed to transfer part of its indirect shareholding in Safaricom Limited (“Safaricom”) to Vodacom Group Limited (“Vodacom”), its sub-Saharan African subsidiary. Based on the agreed terms of the transaction, Vodafone will be exchanging a 35% indirect interest in Safaricom for 226.8 million new ordinary Vodacom shares.  The transaction, which has a value of €2,361 million based on Vodacom’s closing share price on Friday 12 May 2017, will increase Vodafone’s ownership in Vodacom from 65% to 70%. Vodafone will continue to hold a 5% indirect interest in Safaricom following the transfer, in addition to the indirect interest held through Vodacom.

As part of the transaction, Vodafone Group has given appropriate assurances to the Government of Kenya to ensure the ongoing success of the long standing partnership between Safaricom, the wider Vodafone Group and the Government of Kenya.

Transaction rationale

The transaction is expected to generate clear benefits for Safaricom, Vodacom and Vodafone Group:

• Vodafone Group streamlines and simplifies the management of its sub-Saharan African holdings;
• Strengthens alignment and cooperation between Safaricom and Vodacom and provides greater scope to share talent and expertise across the region as well as internationally; and
• Vodacom gains exposure to the attractive Kenyan market and one of the most successful and innovative telecoms companies in Africa, further enhancing its investment case and strategic position.

Transaction details

Vodafone currently holds a 40% indirect interest in Safaricom through a wholly-owned subsidiary, Vodafone Kenya Ltd (“VKL”). Vodacom has agreed to acquire an 87.5% shareholding in VKL, representing a 35% indirect interest in Safaricom. Vodafone will retain the remaining 12.5% shareholding in VKL, representing a 5% indirect interest in Safaricom.

Vodacom has agreed to issue 226.8 million new ordinary Vodacom shares to Vodafone, which values the effective 35% indirect interest in Safaricom at €2,361 million based on Vodacom’s closing share price on Friday 12 May. The implied exchange ratio of 1.62 new Vodacom shares for every 100 Safaricom shares compares to an implied exchange ratio of 1.56 based on the 90 day VWAP, 1.63 based on the 180 day VWAP and 1.72 based on the closing prices on Friday 12 May.

Following the transaction, Vodafone Group 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 on Vodafone Group’s free cash flow or its earnings.

After the transaction completes, Vodacom is expected to have a free float of approximately 18%, which means that it will not meet the minimum free float requirement of 20% for its listing on the Johannesburg Stock Exchange (“JSE”). Consequently, Vodacom has secured a two year exemption from the free float requirement from the JSE. Vodafone has committed to Vodacom that, if required, it will sell down a portion of its shareholding in Vodacom before the exemption expires.

Conditions to completion and indicative timetable

Completion of the transaction is subject to a number of conditions, including approvals from Vodacom minority shareholders, approval from the Financial Surveillance Department of the South African Reserve Bank and confirmation from the Kenya Capital Markets Authority that the Transaction does not trigger an obligation for Vodacom to make a mandatory bid for Safaricom.

A committee of Vodacom’s independent non-executive directors has unanimously approved the transaction. Vodacom has appointed an independent expert, Deloitte & Touche to provide a fairness opinion on the proposed transaction which will be included in the circular to be distributed to Vodacom shareholders on or about 5 July 2017 with the general meeting to approve the reorganisation expected to take place on or about 15 August 2017.

The transaction is expected to close in the third quarter of the 2017 calendar year.

For further information:

Media Relations
www.vodafone.com/media/contact

Investor Relations
Telephone: +44 (0) 7919 990 230

About Vodafone Group

Vodafone Group is one of the world’s largest telecommunications companies and provides a range of services including voice, messaging, data and fixed communications. Vodafone Group has mobile operations in 26 countries, partners with mobile networks in 48 more, and fixed broadband operations in 17 markets. As of 31 December 2016, Vodafone Group had 470 million mobile customers and 14.3 million fixed broadband customers. For more information, please visit: www.vodafone.com

About Safaricom

Safaricom transforms lives.

Safaricom provides voice, data, financial services and enterprise solutions for a range of subscribers, small businesses and government, using a variety of platforms. As the biggest communication company in East and Central Africa, Safaricom delights over 28 million subscribers, providing over 200,000 touch points for its customers and offering over 100 different products under its portfolio.

Listed on the Nairobi Securities Exchange and with annual revenues in excess of Kshs 200 Billion, Safaricom invested Kshs 38 billion in building its network last year, providing over 80% of Kenya’s population with 4G, 3G and 2G coverage. Safaricom has harnessed its proprietary fibre infrastructure to build a dedicated enterprise business, providing managed IT services to clients in the East African region, as well as to deliver fibre to homes country-wide. Safaricom pioneered commercial mobile money transfer globally through M-PESA, the most successful service of its kind anywhere in the world. Launched in March 2007, M-PESA now has over 26 million customers and over 140,000 M-PESA Agent outlets countrywide.

About Vodacom

Vodacom is a leading African mobile communication company providing a wide range of communication services including mobile voice, messaging, data and converged services to over 66 million customers. Vodacom has mobile network operations in South Africa, Lesotho, Tanzania, the DRC and Mozambique. Through Vodacom Business Africa, Vodacom also offer business managed services to enterprises in over 30 countries across the continent.

Financial advisor

UBS is acting as sole financial advisor to Vodafone on the transaction.

SOURCE: Vodafone Group