South Africa's Vodacom Group FY profit rises on customer growth

South Africa's Vodacom Group FY profit rises on customer growth

South Africa's Vodacom Group FY profit rises on customer growth

Under the deal, valued at R34.6 billion rand, Vodacom said it will acquire an 87.5 percent shareholding in Vodafone Kenya, representing a 35 percent indirect interest in Safaricom, in return for issuing 226.8 million new shares to Vodafone, raising the British company's stake from 65 percent now to 69.6 percent.

Vodacom, on the other hand, will control 87.5 per cent stake in Vodafone Kenya, giving it indirect control of 35 per cent interest in Safaricom.

The transaction, which has a value of 2.361 billion euros based on Vodacom's closing share price on May 12, will increase Vodafone's ownership in Vodacom to 70% from 65%.

Shameel Joosub, Vodacom Group CEO, said: "A year ago we said that the strategies that we have implemented to differentiate our network experience, to proactively change our pricing and to offer customers more value through segmented and personalised offers, will continue to sustain revenue growth".

"Vodacom's first attempt at a money transfer business wasn't very successful, but this deal could lead to better results", Morning Star analyst Allan Nichols said. Vodafone will retain a 5% holding, while the Kenyan government owns 35%. A similar all-share deal with Vodacom for Vodafone Ghana would boost Vodafone's stake in the South African unit even more, aggravating the float issue, he said. He added that he hopes the closer cooperation between the two companies will help drive the adoption of M-Pesa in Vodacom's other markets. The company however is under pressure from lawmakers and regulators who are debating whether it has a dominant position in the market. Launched in March 2007, M-PESA now has over 26 million customers and over 140,000 M-PESA Agent outlets countrywide. This deal "is a very strong M-Pesa play because it makes you the biggest financial services player in Africa", he said. Vodafone stock declined 0.8 per cent in London.

Vodacom also said Monday that full-year earnings per share excluding one-time items increased 4.5% to R9.23, broadly in line with estimates. Subject to shareholder and regulatory approvals, the proposed transaction will cost Vodacom 34.6 billion rand ($2.6 billion) in exchange for the stake.

Still, Vodacom said its global operations added 2.5 million customers for the year, with worldwide data revenue up 2.3% to 4.11 billion rand, thanks to a 29% increase in customers that use data to 13 million.

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