Regulators have welcomed the Safaricom stake sale, saying the price offered is competitive and the transaction is unlikely to disrupt the market or disadvantage minority shareholders.
Appearing before MPs scrutinising the deal, the Capital Markets Authority (CMA), the Competition Authority of Kenya (CAK) and the Communications Authority said the Safaricom stake sale was a sound decision that would unlock value and strengthen investor confidence in the company.
CMA Chief Executive Officer Wycliffe Shamiah said the KSh34 per share that Vodacom will pay for the 15 per cent stake is competitive and could only have been realised through a block transaction. He noted that the Safaricom stake sale followed proper negotiation between shareholders and met regulatory expectations.
“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,” Mr Shamiah told the joint committee.
Safaricom stake sale seen as positive for investors and market confidence
According to CMA, the Safaricom stake sale is expected to attract both local and foreign institutional investors, a move that could boost the value of the company’s shares. This, the regulator said, has already been reflected in the rise in Safaricom’s share price since the announcement of the agreement.
Mr Shamiah added that the Safaricom stake sale sends a strong signal of confidence in the company, especially with a global telecommunications firm such as Vodafone which owns 65 per cent of Vodacom increasing its investment.
Competition Authority Director General David Kemei said the Safaricom stake sale would also be reviewed at a regional level, as it affects companies operating within the Common Market for Eastern 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,” Mr Kemei said.
Communications Authority Director General David Mugonyi confirmed that Safaricom has already sought approval for the proposed change in shareholding and is expected to receive feedback within a week.
“The preliminary position of the Authority is that the request for the proposed change in shareholding can be accommodated, considering there is no local shareholding threshold requirement under policy, law or regulation, the transaction retains local equity participation through the Government of Kenya, and the deal has Cabinet approval,” Mr Mugonyi said.
The Communications Authority, alongside the Central Bank of Kenya which regulates M-PESA and the Competition Authority, are among the key regulators overseeing the Safaricom stake sale. CBK is one of the institutions required to approve the transaction before it proceeds.
Vodafone Kenya Limited, which will hold the shares on behalf of Vodacom, has also applied to the CMA to be exempted from making a takeover offer to minority shareholders. The company has already met the requirement to publicly announce its acquisition of additional shares.
In addition, the company will be required to secure regulatory approval in Ethiopia, underscoring the cross-border implications of the Safaricom stake sale.
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