Vodacom Group has fleshed out some of the specifics of the consortium that recently secured an operating licence in Ethiopia, revealing the exact proportion each shareholder has in the new venture. The international group, dubbed the Global Partnership for Ethiopia (GPE), was awarded the mobile telecommunications licence in June.
The GPE consortium includes Safaricom (in which Vodacom holds a 35 per cent stake), Vodacom, Vodafone Group (which controls Vodacom), Sumitomo Corporation (a large Japanese international trading and business investment company), and CDC Group, a UK-based development finance institution and impacts investor.
Vodacom holds a stake in GPE through Vodacom International Holdings, which has now agreed to unconditionally fund the Ethiopian operating company with the other consortium members.
“Vodacom’s financial contribution to the Ethiopian opco is restricted to its pro-rata beneficial shareholding of 6.2 per cent, which is not expected to be material. Safaricom, which owns 55.7 per cent of the consortium, plans to release more information on the Ethiopian opco’s funding in the coming months. The Ethiopian opco will also receive strategic, operational support from Vodacom.”
Sumitomo has a 27.2 per cent benefit shareholding in Ethiopia’s opco, CDC Group has a 10.9 per cent beneficial shareholding, and Vodafone has a not stated (“nominal”) beneficial interest.
In a statement to shareholders, Vodacom stated that “the licence unlocks a unique opportunity for the partnership to build out world-class services in Africa’s second-largest country by population, delivering a compelling long-term growth vector for Vodacom and Safaricom.” “Additionally, the investment in Ethiopia broadens Vodacom and Safaricom’s geographic reach.”
On an equity-accounting basis, Vodacom intends to account for both its 6.2 per cent direct stake and indirect exposure through Safaricom. However, because the Ethiopian opco has never traded, it has no material assets, revenue, or net profit.
Vodacom has issued a put option on the shares held by the CDC Group in the holding company as part of the transaction agreements, allowing 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, or 10% of Vodacom’s current market capitalisation) from year eight to year ten of the Ethiopia opco’s commercial operations,” Vodacom stated.