Safaricom has disclosed that its co-investors in its Ethiopia subsidiary retain the right to buy back the 2.78 percent stake they lost when it made an equity investment in the unit in the year to March 2026.
The telco and its South African parent Vodacom Group Limited, through their investment vehicle Vodafamily Ethiopia Holding Limited, participated exclusively in a cash call that raised Sh21.3 billion and increased their combined stake in the telco from 57.41 percent to 60.19 percent.
Safaricom contributed Sh19.64 billion into Vodafamily for the cash call, effectively raising its holding in the Ethiopia unit to 54.17 percent from 51.67 percent in 2025. Vodacom’s stake rose to 6.02 percent from 5.74 percent.
Fellow shareholders Sumitomo Corporation, British International Investment (BII) and International Financial Corporation (IFC) sat out the capital injection, resulting in a dilution of their combined stake to 39.81 percent from 42.59 percent in March 2025.
In its annual report for 2026, Safaricom says that the shareholders’ agreement between the parties allows the minority owners to claw back their lost stakes at a future date.
They can do so by acquiring shares directly from Safaricom and Vodacom, or through a proportional capital injection in cash calls that Safaricom and Vodacom sit out.
“During the year, the group [Safaricom], through its subsidiary Vodafamily Ethiopia Holding Limited, made additional capital contributions, while the other shareholders did not participate. As a result, the group’s ownership interest increased from 51.67 percent to 54.17 percent.”
“In accordance with the shareholders’ agreement, the non-participating shareholders retain the right to acquire their respective “catch-up” shares from the group at a future date to restore their original ownership proportions,” said Safaricom in the annual report.
As a result of the dilution, Japanese corporation Sumitomo saw its stake fall from 25.23 percent to 23.50 percent, as BII’s holding shrunk from 10.11 percent to 9.5 percent. The stake held by the IFC —the World bank’s private investment arm— fell from 7.25 percent to 6.81 percent.
Should the consortium partners fail to claw back their lost stake, Safaricom and Vodacom would stand to reap a bigger dividend once the Ethiopia unit breaks even.
Safaricom has projected that the Ethiopia business will break even by March 2027, as losses for the unit fell 35 percent to Sh21.2 billion in the year ended March 2026 from Sh36 billion a year earlier. The unit generated Sh14 billion in service revenue, including Sh9.5 billion from the sale of mobile data, Sh3 billion from voice and Sh169.4 million from M-Pesa.
Since establishing the Ethiopia business as a greenfield investment in 2021, Safaricom and its consortium partners have injected billions in the unit through a mix of equity and debt, allowing the company to grow its customer base to 13.6 million active users.
Total funding for Safaricom Ethiopia rose to Sh341.7 billion from Sh293.2 billion in the year to March 2025. This funding includes Sh109.8 billion in telecoms operator fee and Sh19.3 billion M-Pesa licensing fee. The operating entity has also borrowed from the local market, in local currency, as part of a balance sheet optimisation strategy.
Safaricom Ethiopia was established in 2021 following a request for proposals issued by the Government of Ethiopia that had made two telecommunications licences available under a bid process. Safaricom, Vodacom, Sumitomo and BII came together under a consortium known as Global Partnership for Ethiopia B.V (GPE) to bid for one of the licences, which they were awarded in May 2021.
GPE subsequently paid the government a licence fee of $850 million (Sh109.8 billion) and formed a wholly owned subsidiary, Safaricom Telecommunications Ethiopia Plc, to act as the operating arm.
Initially, Safaricom held a 55.71 percent stake in GPE, followed by Sumitomo at 27.2 percent, BII at 10.9 percent and Vodacom at 6.19 percent.
In August 2023, the IFC made a debt and equity investment of $257.4 million (Sh33.29 billion at current exchange rates) in Safaricom Ethiopia.
The equity portion of $157.4 million (Sh20.3 billion) handed the organisation a stake of 7.25 percent in GPE, while diluting the stakes of Safaricom, Sumitomo, BII and Vodacom to 51.67 percent, 25.23 percent, 10.11 percent and 5.74 percent respectively.
These are the stakes that were diluted further upon the cash injection by Safaricom and Vodacom in the latest reporting period.
