Vodacom Seeks Majority Control of Safaricom in $2.1 Billion Deal Focused on M-Pesa and Ethiopia

Vodacom is moving to raise its stake in Safaricom from 35% to 55% in a transaction valued at about $2.1 billion, positioning the Kenyan operator as a subsidiary as the group expands further into fintech and Ethiopia.

The proposed Vodacom-Safaricom deal involves acquiring 15% from the Kenyan government and 5% from Vodafone Group at KES 34 per share, according to details released by Vodacom management and investor documents.

The transaction would give Vodacom majority control of Safaricom, East Africa’s largest telecom operator by market share and one of the region’s most profitable mobile money businesses through M-Pesa.

Vodacom said the acquisition is aimed at strengthening its position in East Africa while gaining greater control over Safaricom’s fiber, tower and spectrum assets alongside its high-growth fintech business. Safaricom controls about 65% of Kenya’s telecom market and serves about 38 million M-Pesa customers in Kenya.

The group is also betting on Safaricom’s expansion into Ethiopia, where the Kenyan operator launched commercial mobile services in 2022 and has continued building infrastructure and customer adoption.

Under the proposed ownership structure, Safaricom would be 55% owned by Vodacom, 20% by the Government of Kenya and 25% by public investors once the deal closes.

Deal Structure and Valuation

The 20% acquisition values the incremental stake at an implied FY26 EV/EBITDA multiple of 6.9x. Vodacom said the blended valuation for its total 55% holding implies a lower multiple of about 5.8x.

The existing 35% stake in Safaricom has generated more than 100% total return for Vodacom since 2017, according to company disclosures, reinforcing the strategic importance of the Kenyan telecom operator within the group’s African portfolio.

In addition to increasing its stake in Safaricom, Vodacom is also purchasing rights to future Safaricom dividends tied to the Kenyan government’s remaining 20% shareholding.

Vodacom paid about ZAR 5.4 billion, equivalent to roughly KES 38.3 billion, upfront to secure future dividend rights valued at approximately ZAR 7.5 billion or KES 53.3 billion.

The structure means the Government of Kenya receives KES 38.3B upfront while transferring rights to future Safaricom dividends linked to its remaining stake.

Vodacom said the transaction is denominated in Kenyan shillings and will be financed through commercial KES borrowings, with associated borrowing costs expected to flow through finance costs.

“We expect the amortization of intangibles will result in some modest earnings dilution in FY 2027,” Vodacom’s finance leadership said in investor commentary.

“In addition to the stake acquisition, we are also buying the right to receive future Safaricom dividends amounting to an equivalent ZAR 7.5 billion for an upfront payment of ZAR 5.4 billion.”

The company added that offsetting income from the dividend arrangement would be reported through the non-controlling interest line.

Regulatory Delays and Court Challenge

The deal has received approval from the Kenyan Parliament and COMESA, but implementation has been delayed following a High Court status quo order linked to petitions challenging the transaction.

The petitions question the valuation structure and the implications of increased foreign ownership in one of Kenya’s most strategic corporate assets.

A virtual hearing is scheduled for May 18, 2026, as the High Court considers objections tied to the proposed increase in Vodacom’s stake in Safaricom.

If approved, the transaction would mark one of the largest telecom and fintech-related corporate deals in East Africa, while giving Vodacom greater exposure to Safaricom’s mobile money earnings and Ethiopia growth plans.