Regulators have welcomed the sale of 15% stake in Safaricom held by the government of Kenya, noting that the price was competitive and the transaction is unlikely to negatively affect the market.
The Capital Markets Authority (CMA), Competition Authority of Kenya (CAK), and the Communication Authorityof Kenya (CA) told MPs scrutinising the deal that the divestiture would yield benefits for the minority shareholders in Safaricom.
CMA, Chief Executive Officer, Wycliffe Shamiah, said the Ksh 34 per share that Vodacom has offered could only have been achieved through a block sale.
“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 Shamiah.
He 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.
“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 Shamiah.
Competition Authority of Kenya, Director General, David Kemei said the transaction would 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 the Competition Authority of Kenya Director General.
On his part, Communication Authority of Kenya 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 Mugonyi.
The Communication Authority of Kenya is one of the key regulators overseeing Safaricom, along with the Central Bank of Kenya (CBK) that is involved in regulating of M-PESA, and the Competition Authority of Kenya watching out the impact on the market. CBK is among the institutions required to give the nod for the transaction to go ahead.
Vodafone Kenya, 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.
Vodacom is also required to secure approval from regulators in Ethiopia, where Safaricom has a subsidiary.