Regulators have welcomed the sale of part of the Government’s stake in Safaricom, saying that the price was competitive and the transaction is unlikely to negatively affect the market.
The Capital Markets Authority (CMA), Competition Authority (CAK), and the Communication Authority told MPs scrutinising the deal the divestiture was a good idea and would yield benefits for the minority shareholders in Safaricom.
Wycliffe Shamiah, the Chief Executive Officer of the CMA, said the KSh34 per share that Vodacom will pay for the 15 per cent stake is competitive and could only have been achieved through a block sale. He said CMA encourages negotiation between the parties in a transaction of this nature, and the shareholder-to-shareholder deal is sound.
“Divestiture of non-core commercial functions allows the Government to concentrate managerial capacity and public expenditure on priority service areas, including infrastructure, health and education,” said Mr Shamiah at the meeting with the joint committee.
CMA said the transaction is likely to appeal to local and foreign institutional investors, which will result in an increase in the value of the shares, which has been evident in the surge of the share price since the announcement of the agreement.
“This is because it signals confidence in Safaricom once a strong global telecommunication company such as Vodafone (which owns 65 per cent of Vodacom) increases its investment in the company,” said Mr Shamiah.
David Kemei, the Director General of the CAK, said the transaction would also be analysed at the regional level as it affects companies that operate in member states of the Common Market for East and Southern Africa (COMESA).
“It is the Authority’s preliminary view that the divestiture and the associated change in ownership will occur at the shareholder level and are not expected to result in any change to the existing market structure,” said Mr Kemei.
CA Director General David Mugonyi said Safaricom has already requested approval of the proposed change in shareholding and is going to get word from the regulator within a week.
“The preliminary position of the Authority is that the request for the proposed change in shareholding can be accommodated considering that: there is no local shareholding threshold requirement under policy, law or regulations, the transaction retains local equity participation through the government of Kenya and the transaction has been approved by the Cabinet,” said Mr Mugonyi.
Mbadi: Why Kenya is selling a 15 per cent stake in Safaricom to Vodacom
CA is one of the key regulators overseeing Safaricom, with the Central Bank of Kenya (CBK) also involved because of regulation of M-PESA, and the Competition Authority watching out for the market. CBK is among the institutions required to give the nod for the transaction to go ahead.
Vodafone Kenya Limited, the company that will hold the shares on behalf of Vodacom, has also applied to the CMA to be exempted from making a takeover of Safaricom by buying out minority shareholders. It has already complied with the requirement to make a public announcement of its acquisition of additional shares.
The company will also be required to secure approval from regulators in Ethiopia.
