Securitization of SCOM Deal GOK Vs Vodacom

Securitization is when you take money that normally comes slowly over many years — like dividends — and convert it into one big lump-sum payment today by selling the rights to that future income.

In short:

future small income → exchanged for big cash now.

Safaricom – GOK – Vodacom Transaction (Explained)

Vodacom is giving GOK about KES 40B upfront, but this is advance dividend money, not a standard sale payment.

Safaricom will later pay those dividends to Vodacom, not to GOK.

GOK is also selling shares at KES 34, higher than the market price of KES 28–29.

So Kenya gets:

• a big upfront payment
• a premium sale price

But GOK loses future dividend income and some ownership influence.

Advantages (GOK Perspective)

1. Instant Large Cash (KES 40B Upfront)
   Government receives multiple years of dividend income immediately.
2. Sold at a Premium Price (KES 34 vs 28–29)
   Kenya benefits because the sale price is above the market rate.
3. Future Risk Shifted to Vodacom
   Vodacom takes on all dividend and price risk going forward.
4. Kenyan Board Control Maintained
   Governance remains Kenyan-led, protecting strategic control.
5. Reduced Political Interference
   Stronger corporate governance with Vodacom reduces political influence in operations.

Disadvantages (GOK Perspective)

1. Loss of Future Dividends
   GOK gives up future income equal to the KES 40B advance.
2. Reduced Ownership Influence
   Lower shareholding means less voting power.
3. Miss Out if the Price Rises Later
   If Safaricom rises to 35, 40, 50 — the gains go to Vodacom.
4. One-Time Money Only
   Solves short-term cash needs but removes long-term income flow.
5. Public Sensitivity
   Many Kenyans feel national assets are being sold for quick cash.

How This Affects Retail Safaricom Investors (25% Public Shareholding)

Retail investors were not included directly in the transaction — but there are major indirect effects:

1. The Share Price Was Likely Capped at KES 34 During the Deal Process

Because Vodacom was negotiating a purchase at KES 34, it is possible that:

• Safaricom’s price was prevented from rising above 34
• There was pressure to keep the market price low
• Government may have avoided actions that could cause the price to rally

Result: Retail investors may have missed a major rally opportunity. Safaricom could have risen above 34 like other NSE stocks this year, but the deal likely kept its price suppressed.

2. Price Fluctuations Will Return to Normal After Deal Completion

Once Vodacom completes the transaction:

• price pressure is removed
• Safaricom will resume normal market movement
• fundamentals and earnings will dominate

Opportunities for retail investors:

• buying when price drops
• holding for recovery and long-term growth

This may be the best time to accumulate at low prices.

3. Dividend Stability Should Remain Strong

Vodacom wants its KES 40B back through dividends. This may push Safaricom to:

• reduce wastage
• maintain dividend payouts
• improve efficiency
• focus on profitability

Benefit for retail investors: more consistent dividends and better long-term corporate discipline.

4. Kenyan Control Is Maintained — Reduces Political Interference

Even with Vodacom’s bigger role:

• board remains Kenyan-led
• key decisions remain controlled locally

This reduces political risks and improves management professionalism — good for retail shareholders.

5. If Price Rises Strongly in Future — Retail Wins

Even though GOK loses potential gains, retail investors fully benefit from:

• share price recovery
• long-term growth
• improved governance

Retail investors now hold a clean 25% stake untouched by the transaction.

6. Market Confidence May Improve

A major international investor (Vodacom) buying more shares signals confidence in Safaricom’s future. This could strengthen investor appetite, foreign inflows, and long-term price support.