The Kenyan court ruling that nullified part of Vodacom’s Safaricom deal triggered events of default and cross-default under some of the group’s funding arrangements, forcing it to seek waivers from lenders, its interim results show.
Kenya’s high court nullified the government’s sale of a 15% stake in Safaricom to Vodacom’s subsidiary Vodafone Kenya on 15 September, two and a half months after the deal closed. The ruling “gave rise to certain events of default and cross-default under specified group funding arrangements”, Vodacom said in the notes to its results for the six months to 30 September, published on Tuesday.
Some lenders gave written undertakings not to demand repayment or accelerate their facilities because of the judgment. But where those undertakings did not give Vodacom an unconditional right to defer settlement for at least 12 months, the debt had to be reclassified. As a result, R2.3-billion of borrowings moved from non-current to current liabilities at 30 September.
One default was on a Stanbic Bank Kenya facility linked to the R5.1-billion Vodacom paid the Kenyan government for rights to a portion of its future Safaricom dividends. Under a standstill agreement to remedy that default, Vodacom agreed not to withdraw money from a dedicated account. That left R1.2-billion in dividends it had received restricted at the end of the period.
Our confidence in the strategic rationale of the transaction remains unchanged.
Vodacom Group CEO Shameel Joosub
After the period ended, Vodacom obtained waivers from the relevant lenders for all defaults arising solely from the judgment, it said.
The Safaricom deal has transformed Vodacom’s balance sheet. Net debt rose by R78.8-billion year on year to R135.6-billion. Vodacom funded the acquisition with R35-billion of debt, R9-billion of it in preference shares, and consolidated R18.1-billion of Safaricom’s own net debt. Its leverage, measured as net debt to Ebitda (earnings before interest, tax, depreciation and amortisation), rose to 1.6x from 0.9x. On a pro forma basis, with Safaricom’s Ebitda annualised, it was 1.3x.
Consolidated
Vodacom has consolidated Safaricom as a subsidiary since 30 June and booked a once-off accounting gain of R23.1-billion on remeasuring its previous stake. If the high court’s judgment stands, Vodacom’s stake would fall from 55% to about 40%, TechCentral reported in October, costing it control.
On 13 October, the court of appeal ordered that the status quo be maintained, leaving Vodafone Kenya as the registered holder of the shares, and directed that the appeal be expedited. Vodacom expects a hearing date to be set before the end of December. The Kenyan government, Vodafone Group and Vodafone Kenya have all appealed, and the petitioners have appealed parts of the judgment.
“Our confidence in the strategic rationale of the transaction remains unchanged,” said Vodacom CEO Shameel Joosub. – (c) 2026 NewsCentral Media
