South African telecoms group Vodacom books $1.4 billion gain from Safaricom takeover

South African telecommunications group Vodacom booked a one-off accounting gain of R23.1 billion ($1.41 billion) after increasing its ownership of Kenya’s Safaricom to 55%, a transaction that moved the Nairobi-listed operator from an associate to a subsidiary in Vodacom’s accounts.

The gain, equivalent to about $1.41 billion at the exchange rate of R16.3621 to the dollar reported on November 10, is a revaluation recorded when a company obtains control of a business it previously accounted for differently. It is not cash revenue generated by Safaricom during the six-month reporting period.

Vodacom disclosed the gain in its interim results for the six months ended September 30, 2026. The company’s net profit attributable to equity holders rose to R34.4 billion ($2.10 billion) from R9.1 billion ($556 million) a year earlier, an increase of more than 200%. The accounting gain contributed substantially to that increase, making it important to distinguish the reported profit from the group’s underlying operating performance.

The transaction that triggered the revaluation closed on June 30, when Vodacom acquired an additional 20% interest in Safaricom, taking its holding from 35% to 55%. The additional shares came from the Kenyan government and Vodafone Group. Vodacom acquired 15% from the government and another 5% from Vodafone, according to transaction details reported by Business Daily.

The South African group’s purchase of the additional shares gave it majority ownership of Safaricom. It also paid the Kenyan Treasury an upfront discounted dividend, which is to be recovered through future dividends attributable to the government’s remaining 20% holding in Safaricom.

The change in accounting treatment extends beyond Safaricom itself. Vodacom said M-Pesa Africa, previously a joint venture between the two telecommunications groups, became a subsidiary after the transaction. The investment vehicle used for the consortium’s investment in Ethiopia also moved into Vodacom’s subsidiary structure. The changes give Vodacom a greater accounting and operational interest in businesses connected to Safaricom’s wider operations.

However, the ownership change remains subject to a legal challenge in Kenya. In September, the High Court ruled that the transaction was invalid and ordered the restoration of the government’s 15% stake, finding that the sale had not adequately disclosed that it would give Vodacom control of Safaricom. The ruling also raised concerns about public participation and the information presented during the divestiture process.

The Kenyan government, Vodafone Group and Vodafone Kenya have appealed aspects of the judgment. Reuters reported on November 10 that the Court of Appeal had ordered the parties to maintain the status quo while the appeal proceeds. That order allows Vodacom to retain control of Safaricom pending the court’s decision; it does not resolve the underlying dispute.

Vodacom said it continues to account for Safaricom as a subsidiary from June 30 and remains confident in the transaction’s strategic rationale. The company said it expects an appeal date to be set before the end of December 2026. The dispute is a civil court matter, and the cited reporting does not identify criminal charges against the parties.

The results also show the scale of Safaricom’s contribution to the enlarged group. Vodacom reported revenue of R102.5 billion ($6.26 billion) for the half year, up 25.6%, while service revenue increased 29.4% to R85.1 billion ($5.20 billion). Financial-services revenue rose 99% to R15.9 billion ($972 million), although the reported increase reflects the consolidation of Safaricom and should not be read as purely organic growth.

The Safaricom transaction therefore has two distinct financial consequences for Vodacom: a substantial, non-cash revaluation gain in the current reporting period and the consolidation of a major East African telecommunications and mobile-money business into its group results. The final legal outcome in Kenya could still affect the ownership structure, while the operating contribution will become clearer in subsequent reporting periods.