Vodafone details structure for Ethiopia venture


Vodafone Group has spelt out some of the details of the consortium that recently secured an operating license in Ethiopia, disclosing the exact stake each shareholder has in the new venture.

The international consortium, which is called the Global Partnership for Ethiopia (GPE), was awarded the mobile telecommunications license in June for US$850 million.

MTN Group also put in a US$650 million bid but was not successful. MTN has since said it has no intention to bidding again.

The GPE consortium includes Safaricom (in which Vodafone is a 35% shareholder), Vodacom, Vodafone Group; Sumitomo Corporation (a large Japanese international trading and business investment firm), and CDC Group, a UK-based development finance institution and impact investor.

Vodacom holds its stake in GPE through Vodacom International Holdings, which has now entered into unconditional agreements with the other consortium members to fund the Ethiopian operating company.

A new operating company has been established in Ethiopia called Safaricom Telecommunications Ethiopia, through a holding company in the Netherlands.

“Vodacom’s commitment to fund the Ethiopia opco is limited to its pro rata beneficial shareholding of 6.2%, 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 opco in the coming months. Vodacom will also provide strategic operational support for the Ethiopia opco.”

The beneficial shareholding percentages in the Ethiopia opco are:

  • Safaricom: 55.7%
  • Sumitomo: 27.2%
  • CDC Group: 10.9%
  • Vodacom: 6.2%
  • Vodafone: Not disclosed (“nominal”)

“The license unlocks a unique opportunity for the consortium to build out world-class services in Africa’s second largest country by population, providing a compelling long-term growth vector for Vodacom and Safaricom,” Vodacom said in a statement to shareholders on Monday. “Furthermore, the investment in Ethiopia enhances Vodacom and Safaricom’s geographic diversification.”

Vodacom intends to account for both its 6.2% direct stake and indirect exposure through Safaricom on an equity-accounted basis. The Ethiopia opco has not traded to date and so does not have any material assets, revenue or net profit.

As part of the transaction agreements, Vodacom has granted a put option on the shares held by the CDC Group in the holding company to facilitate the latter’s potential exit in the investment. “CDC Group can only put the shares at fair market value (the total exposure of the put option is capped at US$1.74-billion, representing 10% of Vodacom’s current market capitalisation) from year eight to year 10 from the year of commencement of commercial operations of the Ethiopia opco,” Vodacom said.


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