Safaricom will see its ownership in the Ethiopian subsidiary drop to 51.7 percent as a result of a $157 million (Sh22.5 billion) equity investment by the International Finance Corporation (IFC) in the new venture.
The Kenyan telco currently holds a 55.71 percent stake in Safaricom Ethiopia where its other partners including Vodacom Group Limited will also be diluted due to IFC’s entry.
The 51.7 percent stake means the company will retain control of the joint venture. The impending changes in the Ethiopian business has been disclosed by Vodacom which owns a 35 percent stake in the Nairobi Securities Exchange-listed firm.
“In early June, we announced the addition of the IFC to our global consortium, which already included powerful partners from the UK and Japan,” Vodacom’s CEO Shameel Joosub told analysts in a recent conference call.
“Following the investment, IFC will hold a minority position in Safaricom Ethiopia, modestly reducing our direct equity exposure from 6.2 percent to 5.7 percent. Safaricom will remain in control of the consortium with 51.7 percent of the equity.”
Besides the equity investment, IFC will also provide the Ethiopian business with $100 million (Sh14.3 billion) worth of loans to fund its capital-intensive rollout of telecoms and mobile money services.
Other investors in Safaricom Ethiopia that will also be diluted are Sumitomo Corporation which currently holds a 27.2 percent stake and British International Investment (10.9 percent).
Vodacom says the entry of IFC is an expansion of the strategy of working with deep-pocketed institutional investors who stand ready to fund the business which is expected to break even towards the end of 2026.
Safaricom Ethiopia reported a start-up loss of Sh22.1 billion in the six months ended March.
