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Thursday, November 23, 2006

More on Safaricom and Vodafone Kenya

I have been in touch with Vodafone Investor Relations again about the Safaricom interest, the party line still is:
We have an effective interest of 35%. There is no further information
Well an accountant in Kenya called Pesa Tu has explained how theoretically both Vodafone and the Kenyan government can be telling the truth.

I have re-drawn his chart to make it more legible:

There are three facts you must keep in mind when looking at this chart:

1. According to Safaricom, the Shareholding is 60% Telkom Kenya Ltd (TKL) and 40% Vodafone (K) Ltd which is true.

2. According to Vodafone Plc. Annual Reports, they acquired 5% indirect interest in Safaricom from Mobitelea Ventures in 2003. Note, they said indirect interest not direct interest. Meaning that Mobitelea Ventures has an indirect interest in Safaricom. i.e.they don’t directly own shares in Safaricom but in another company (VKL) that owns shares in Safaricom.

3. The only way to have an indirect interest in Safaricom is through Vodafone Kenya Ltd (VKL). TKL’s stake is still the same as at the time of the Original Agreement in 2000.
Thereby Vodafone PLC can own an indirect 35% (87.5%x40%) in Safaricom. In effect there are many ways in many countries with very limited disclosure that the Mobiltea holding and the ownership of Mobiltea Ventures Ltd can be hidden. Also, more striking is that Vodafone plc is of such a size these days, they can buy out Mobiltea and not reveal how much they paid for the equity because the acquisition will not be material in the overall picture.

We probably will never know who owns Mobiltea Ventures Ltd or how much profit they have made on the transaction.