Vodacom said it entered into definitive unconditional agreements together with the other consortium members on 10 September to fund Safaricom Ethiopia, the vehicle for the newly licensed Ethiopian operator. Vodacom said its commitment to fund the Ethiopian unit is limited to its pro rata beneficial shareholding of 6.2 percent, which is not expected to be material.
Safaricom, as the lead member of the Consortium, intends to provide additional disclosure on the funding of the Ethiopia operations in the coming months. Vodacom will also provide strategic operational support for the unit.
As part of the transaction agreements, Vodacom said it has granted a put option on the shares held by the CDC Group in the holding company to facilitate CDC Group’s potential exit in the investment. If the option is exercised, Vodacom would buy an additional 10.9 percent stake in Safaricom Ethiopia from CDC Group at a cost of up to USD 1.74 billion.
It said CDC Group can only put the shares at fair market value, and the total exposure of the put option is capped at USD 1.74 billion, representing 10 percent of Vodacom’s current market capitalization. The option can be exercised from year eight to year ten from the year of commencement of commercial operations of the Ethiopia operating company.
If Vodacom buys the CDC stake, it will have raised its exposure in Ethiopia by a large margin. Vodacom also holds a 35 percent stake in Kenya’s Safaricom, the majority shareholder in the Ethiopian business with a 55.7 percent equity.
The other shareholder in the venture is Japan’s conglomerate Sumitomo Corporation with a 27.2 percent stake. Vodafone, which has stakes in Safaricom and Vodacom, has a nominal interest in the Ethiopian business.
