The International Finance Corporation, which is part of the World Bank Group, edges closer to buy to buy USD 160 million of equity and about USD 100 million of debt of Safaricom Ethiopia. If the move approved by the shareholders of the telecom company and IFC, it will bring down the share of Safaricom on the consortium to 50 percent.
Peter Ndegwa, the CEO of the parent company for Safaricom Ethiopia, in his interview with the Business Daily, confirmed that the negotiation to sell some shares for the World Bank subsidiary is underway.
“At this stage, only IFC will come into the shareholder family. It is at an advanced stage, but it is subject to approval both on their end and also on our end,” the CEO said. “All shareholders need to approve for IFC to come in. It is one of those where if it’s not approved by one shareholder it won’t happen. The intention would be approximately USD 160 million of equity and about USD 100 million of debt.”
If the deal with IFC receives a nod from shareholders of the telecom company, the stake of every shareholder will be diluted, while Safaricom will remain as a major shareholder.
“When IFC comes in, then everyone will be diluted proportionately and Safaricom will have about 51 percent or thereabout. In terms of debt, it needs to be as much as we need, or as much as IFC has appetite for. Initially, it’s likely to about one million dollars from IFC, and in future they may syndicate with others if we need more but that one is subject to future consideration,” the CEO added.
Safaricom also reiterated that it is still keen to invest two billion dollars in the coming years for its venture in Ethiopia. It has also a plan to take some loans from local banks to finance its operation in Ethiopia.
“We have signalled that over a five-year period, we will spend approximately two billion dollars. The split of debt and equity will be dependent on not just the ratios we need to retain locally, but also the need to mix between dollar and locally denominated debt so that we can also be able to ensure that it’s efficient from a currency perspective,” the CEO remarked.
So far, Safaricom invested over USD 1.2 billion. Of that, 850 million was spent for license, while the rest was used to construct data centre and infrastructure development. The telecom developer, which launched service in Addis Ababa and other major cities across the country, managed to get 300,000 subscribers thus far, according to Ndegwa.
