Safaricom #ticker: SCOM will hold a controlling stake in a series of companies formed to enter the Ethiopian telecommunications market, giving the company 55.7% beneficial ownership in the new venture.
The Nairobi Stock Exchange-listed company revealed the exact ownership structure of the consortium which on Saturday won a license to enter the new market at a cost of $ 850 million (91.6 billion shillings).
Japanese conglomerate Sumitomo Corporation is the second largest investor with a 27.2% stake, followed by British sovereign investment fund CDC Group (10.9%) and South African group Vodacom (6.2%).
Vodafamily Ethiopia Holding Company Limited, incorporated in England, will own Global Partnership for Ethiopia BV (GPE), registered in the Netherlands.
GPE in turn will own a new operating company in Ethiopia with a 15-year license, with the right to apply for an additional 15 years.
“As Safaricom will directly or indirectly own more than 50% of the capital of each of the companies in the consortium, each of these companies in the consortium will become a subsidiary of Safaricom,” the telephone company said in a notice.
“The consortium, through the operating company, intends to start commercial operations in 2022.”
Using more than one investment vehicle will give the business flexibility in terms of more favorable tax and debt financing.
The Safaricom group defeated a competing bid from a consortium led by South African group MTN whose offer of 600 million dollars (64.7 billion shillings) was deemed too low by Ethiopian officials.