Fact Check: What Kenyans Are Getting Wrong About the Safaricom-Vodacom Deal
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The people of Kenya have been bombarded with rumours and speculation about the government selling its stake in Safaricom Plc to South Africa ever since the government decided to reduce its ownership in the company.
Nevertheless, the facts show numerous false statements regarding the issue.
As far as the transaction goes, the Government of Kenya has sold only 15% of Safaricom to Vodacom, a South African telecommunications company, resulting in the lowering of the government’s ownership in Safaricom from 35% to 20%.
Additionally, Vodacom has bought the 5% effective ownership of Vodafone Group and now owns 55% in Safaricom and hence is the majority owner in the company.
The rest of the shares in Safaricom, 25%, are still owned by the public via the NSE.
The deal worth $2.1 billion (approximately 272 billion) has gone on after the process of obtaining regulatory approvals and judicial proceedings.
Proceeds from the deal will go towards infrastructure development, according to the government.
Myth Number One: The Government of Kenya Sold Safaricom
This myth is incorrect.
The government of Kenya did not sell the company.
What actually happened was that the Government sold only 15% of its 35% equity interest, and thus still retains a substantial interest of 20%.
Other public shareholders also hold about 25% equity interest in the company through the Nairobi Securities Exchange.
Consequently, the company still remains a publicly quoted company in Kenya and not a completely foreign-owned company.
Also Read: What the Vodacom-Safaricom Deal Means for Kenya
Misconception Two: Safaricom Has Become a South African Firm
This is not true.
Even though Vodacom has taken a 55% stake in Safaricom and thus will be the controlling party in the firm, the firm still retains its Kenyan nationality as the business is incorporated in Kenya.
It will also continue to conduct its activities in accordance with the Kenyan laws and regulations.
Safaricom will also retain its listing at the Nairobi Stock Exchange, while 20% of its shares belong to the Government of Kenya, and another 25% belongs to the public.
Myth Three: M-PESA Will Be Transferred to South Africa
There is no basis for this myth at all.
The M-PESA platform, its processes, technologies, and operations have stayed put in Kenya.
This mobile money transfer system is still being run by Safaricom in Kenya and has millions of local clients who are under the jurisdiction of Kenyan regulators.
Nothing about the deal mentioned any move of M-PESA technology or data from Kenya.
Misconception Four: There Will Be Many Job Losses
Again, this belief is not true either.
Safaricom has promised its stakeholders that the management of the company will continue to ensure that the management will retain its predominantly Kenyan character.
The deal maintains the local structures in management, operations and dealings with Kenyan suppliers.
Furthermore, Parliament attached certain conditions in approving the deal to ensure that there were no job losses due to the change of shareholding.
Consequently, there have been no layoffs as a result of the change in ownership.
Also Read:How Safaricom Is Transforming from a Telecom Company into a Technology Leader
Misconception Five: The Government Is Totally Out of Control
This is not true.
Even though the Government no longer owns the majority stake in the company, it is still strategically influential by virtue of owning 20% of the shares.
With respect to the shareholder structure, the government still has veto rights over strategic matters such as branding and some international expansions.
Thus, the Government is still relevant in protecting national interests despite not being the majority owner anymore.
Moreover, Safaricom is still governed by Kenyan laws as well as regulations for all listed companies at the Nairobi Stock Exchange.
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A photo collage of a Safaricom shop and a vodacom shop. PHOTO/ File
