Vodacom profit boosted by 3 million new customers in SA

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Vodacom said Monday it has agreed to acquire a 35% stake in Safaricom, Kenya's biggest mobile operator, from Vodafone International Holdings B.V.by issuing 226.8 million new ordinary shares.

Colao said last month that the company would fold some of its operations in sub-Saharan Africa into Vodacom as part of a "single, coordinated Africa strategy".

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. As this is a related-party transaction, Vodafone, which now owns 65% of Vodacom, is precluded from voting on this at this meeting. "In addition to producing mutually beneficial opportunities for growth, it will create further incremental value through the close cooperation between the two businesses, particularly in driving M-Pesa adoption across our operations", said Shameel Joosub, CEO Vodacom Group.

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.

Customers in South Africa grew to 8,6% to 37,1m.

The proposed transaction will expose Vodacom Group to the attractive high growth Kenyan market, being one of the largest and most advanced economies in east and central Africa that has made significant strides in technological innovation.

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South Africa's largest mobile operator by subscribers, is buying a $2.59 billion stake in Kenya's Safaricom Ltd.in the hope of popularizing the highly-touted East African mobile money service M-Pesa across the broader continent.

All this will leave Vodafone with a raised 70% stake in Vodacom, and a much reduced 5% stake in Safaricom.

Equipment sales negatively affected the South African and group revenue figures, contracting 4% over the year.

Vodacom also said on Monday that full-year earnings per share increased by 4.5 percent to 9.23 rand, which are in line with estimates.

Based on Friday's JSE closing price of R152.49 per Vodacom share, this values the proposed transaction at R34.6 billion. In its global operations, service revenue declined by 5,6%, though it would have climbed by 2,2% if it hadn't been for currency movements. The company's EBITDA increased in the period under review, to ZAR31.238 billion (up by 2.9% y-o-y), while net profit grew 1.7% to ZAR13.126 billion (ZAR12.910 billion in FY2015/16).