Vodafone offloads shares in Vodacom to major investors
Vodacom’s share price dropped 8% on Wednesday after its UK parent company Vodafone sold down shares in the JSE-listed mobile operator to meet a 20% minimum free-float requirement by the local bourse.
Vodafone offloaded 90-million shares, representing 5.2% of Vodacom ordinary shares. This raised R14.85bn, reducing Vodafone’s interest to 64.5%, from 69.7%
The shares were sold to institutional investors at R165 through an accelerated bookbuild and formed part of an earlier deal reached between the two companies.
In May, Vodacom agreed to buy Vodafone’s 35% interest in Safaricom, which is Kenya’s largest mobile operator.
The R35bn acquisition entailed issuing new shares to Vodafone, which then increased its shareholding in Vodacom, thus exceeding the 20% minimum free-float requirement in terms of the JSE rules.
“The objective of the placing was to ensure that Vodacom meets the free-float requirement and to restore Vodafone’s shareholding in Vodacom to a percentage that is broadly similar to that which it held before implementation of the Safaricom transaction,” Vodacom said in a statement on Wednesday.
For Vodacom, the transaction with Safaricom will solidify its footprint in Africa and help diversify the mobile provider’s earnings stream amid the sluggish growth in its main home market in SA.
Vodacom Group CEO Shameel Joosub has said that acquiring a strategic interest in Safaricom would provide shareholders with “access to a high-growth‚ high-margin‚ high-cash generation business operating in a high-growth market”.
Vodacom is the biggest mobile operator in SA but still trails MTN Group, which has a larger subscriber base spread across about 22 countries.
In June 2017, Vodacom had almost 70-million subscribers compared with MTN’s 231.8-million.
For Vodafone, the partial exit in Safaricom represented a strategy to consolidate its businesses in Africa under its subsidiary. Vodafone will retain a 5% interest in Safaricom while the Kenyan government owns 35%. The rest of the company, about 25%, is held by the public.
Vodacom’s share price settled 7.86% lower to R164.28 on the JSE, giving it a market value of R282.8bn. MTN’s market valuation stood at R233.6bn.
With Thabiso Mochiko