Safaricom will own a majority stake in a series of companies formed for entry into Ethiopia’s telecoms market, giving the firm effective ownership of 55.7 per cent in the new venture.
The Nairobi Securities Exchange-listed company has disclosed the exact ownership structure of the consortium that on Saturday won a licence to enter the new market at a cost of $850 million.
Japan’s conglomerate Sumitomo Corporation is the second-largest investor with a 27.2 per cent stake, followed by UK’s sovereign investment fund CDC Group (10.9 per cent) and South Africa’s Vodacom Group (6.2 per cent).
Vodafamily Ethiopia Holding Company Limited, incorporated in England, will own Netherlands-registered Global Partnership for Ethiopia B.V. (GPE).
GPE will in turn own a new operating company in Ethiopia whose licence will run for 15 years, with the right to apply for an additional 15 years.
“As Safaricom will directly or indirectly hold more than 50 per cent equity stake in each of the consortium companies, each such consortium company will become a subsidiary company of Safaricom,” the telco said in a notice.
“The consortium, through the operating company, intends to commence commercial operations in 2022.”
The use of multiple investment vehicles will give the venture flexibility in terms of more favourable taxation and debt financing.
The Safaricom group beat out a rival bid from a consortium led by South Africa’s MTN Group whose offer of $600 million was deemed too low by Ethiopian officials.