Thursday, November 23, 2006

EXTREMELY SIMPLIFIED SAFARICOM/VODAFONE SHAREHOLDING STRUCTURE


CLICK here to see the chart on
http://telebusillis.blogspot.com/2006/11/more-on-safaricom-and-vodafone-kenya.html

*OR DOUBLE CLICK ON THE PHOTO TO SEE IT CLEARLY


This is a very very simplified Diagram(some information is left out) drawn from information obtained from the Annual reports of Vodafone Plc. as at 31st March, 2004, 2005, 2006. However, its sufficient for illustrative purporses.

Between Vodafone Plc. and Mobitelea Ventures stake in Vodafone Kenya Ltd (VKL), there may be several holding Companies and legal entities (Special Purpose Vehicles). I have ignored this in the simplified chart.
The 87.5% and 12.5% refer to the assumed eventual holdings in VKL by Vodafone Plc. and Mobitelea Ventures through the various legal entities they control.

87.5% control of VKL translates into 35% effective interest of Safricom and 12.5% of VKL translates into 5% effective interest of Safaricom.


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.

Conclusion
Shareholder agreements are legal and still stand since the agreements are between TKL and VKL, not TKL and Vodafone Plc.
The aggrieved parties are Vodafone Plc’s shareholders. TKL isn’t since it agreed a 60:40 split of Safaricom and it still has 60%. Vodafone Plc. diluted its effective interest to 35% from 40%.

Why we are barking up the wrong tree.
The transactions are between Shareholders of VKL (it’s a Private Company), Vodafone Plc and Mobitelea Ventures.TKL, Safaricom Kenya Ltd are strangers to these transactions.

Therefore only the shareholders of the involved parties VKL, Vodafone Plc and Mobitelea Ventures can answer the questions or be aggrieved.

104 comments:

Ssembonge said...

It don't matter how you look at it. It is probable that Vodafone plc paid a bribe to Mobitelea in order to enter into contract with Telkom.

We might see some fall-out in VOD if regulatory authorities decide to investigate these transactions.

coldtusker said...

Pesa - I don't buy into it... If this was an "open" deal then why are we hearing aboout it now?

Why does koimett claim she doesn't know?
What of kagwe?

I am telling you the is something fishy!

Further details on m blog...

Gathara said...

pesa tu,
Once again I would urge you to get your facts straight. This is a quote from a Vodafone Group press release dated 30th May 2000 and entitled Vodafone Airtouch expands operations into Kenya.

"Vodafone AirTouch Plc announces today that its wholly owned subsidiary Vodafone Kenya Limited has signed an agreement with Telkom Kenya to form Safaricom Limited. Safaricom will be owned 60% by Telkom Kenya and 40% by Vodafone AirTouch and includes all the assets and subscribers of the previous cellular operation of Telkom Kenya." -my italics.

Just in case you missed it, the statement expressly declares that Vodafone Kenya Ltd. (VKL) is WHOLLY OWNED (i.e. 100%) by Vodafone Airtouch Plc (Vodafone/Vodafone Group). It also states that Vodafone held 40% (not 30% or 35%) of Safaricom.

And in a statement sent to the Nation , Vodafone Plc states "Vodafone Group Plc has a 35% interest in Safaricom held through Vodafone Kenya Limited, a Kenyan holding company." The paper also reports that Vodafone confirmed that Mobitelea Ventures owns the remaining 5%.

Considering the Vodafone Annual Report of 31st March 2005, which shows that the company bought 5% indirect equity stake, the question is: How and when did Mobitelea Ventures come to control 10% of Safaricom?

If Vodafone had transferred shares in VKL to Mobitelea between May 2000 and January 2003 as you insinuate, this should be easily verified by a check at the Registrar. However, in light of the statement Vodafone sent to Nation, this is unlikely as it would mean that Mobitelea still owns part of VKL and would raise the question why Vodafone did not simply declare this.

In my opinion, the most likely explanation is that Vodafone lied about their 40% stake in Safaricom to cover up a bribe of 10% paid to the mysterious owners of Mobitelea (probably Mo1 and his clique).

pesa tu said...

@Gathara:mmm.....how do i explain the facts to you? Let me start with the year 2000 press release(there's a link to it in the second line of my original post on the Issue).

The press release brings to focus the main problem i.e.
-In year 2000 Vodafone Plc. claims to own 40% of Safaricom.
-As at 31 March 2006 Vodafone Plc(annual report). now has a stake of 35% in Safaricom.Meaning someone else(Mobitelea) have 5%

BUT in Safaricom share Register there are only two shareholders(as per Publicly available information) i.e. Vodafone K ltd. and Telkom.The chart in the post ignores holding Co.s that are btween Vodafone K ltd and Mobitelea ventures.

However,Vodafone Plc. Annual reports declare 35% effective interest in Safaricom.
Now, there's only one way to transfer ownership of part of Safaricom without altering its share register.i.e. Change shareholding of the firm that holds the 40% stake.That is Vodafone K ltd.
NOTE:The Vodafone Press release just tells us they have a 35% interest.We are not told if its a DIRECT interest or INDIRECT interest.

Why you cant find Mobitelea Ventures?
It may be registered abroad.(If you have the necessary sophisitication/knowledge ,physical presence in Kenya isn't necessary to change ownership of Kenyan assets).Our Company registry only keeps record of Kenyan registered companies.(Look at the chart carefully)..there is no secrecy.If they aint registered here there are no records.

There's no fraud, they declared the two shareholders in Safaricom(k) ltd. i.e. TKL and VKL But they are under no obligation to declare the nature of the shareholding in VKL to us(only to the Shareholders of Vodafone Plc.VKL is a privater limited company.

it seems that you are arguing out of ignorance.

Let me give u a list of topics that you can cover to enable you understand this post.I dont mean to be snooty/haughty but read on the following:

-Holding Companies
-Difference between public and private limited companies.
-Meaning of Indirect and Direct interests in shareholding of Co.s
-Cross shareholdings in firms and how effective interest is derived.
-Provisions of UK company Law regarding Subsidiaries(i.e. what u don't have to display in your Annual Reports if you are Registered in the UK)

-Special Purporse entities for debt and purchase of assets

-Vodafone Plc annual reports.(can tell u where to get a hardcopy)

I'm sure WIKIPEDIA and the BBC website can assist in the above task.

oh will get back to the licence fees later

pesa tu said...

@SSembonge: thats where i have a problem.What if Vodafone Plc comes out with a perfectly rational and legal explanation for it.

For example, the shares were pledged to some Bankers?

@Coldtusker: u r hearing about it now coz you were too lazy to check Vodafone Plc. annual reports no,and it probably came out after someone in our negotiating team gave the fact to some journalist or leaked it to them.

Its been 'public' knowledge for a while

Gathara said...

pesa tu,
I noticed that in your hurry to declare me ignorant, you have glossed over the gist of my comment.

First that as of 30th May 2000, VKL was wholly owned by Vodafone Group Plc.

Second, if any transfer of VKL shareholding from Vodafone to Mobitelea occurred between that date and January 2003, then this would be revealed by a check on the ownership records of VKL, which as Vodafone notes in its statement to Nation is a Kenyan company.

Third, the important thing is whether and when such a tranfer took place. If it did occur, and Mobitelea turns out to be "well connected" then an obvious conflict of interest accrues. It begs the question of whether there was collusion in the sale of the 40% shareholding in Safaricom.

If no transfer of VKL shares happened, then we have to ask how Mobitelea came by its 10% shareholding in Safaricom.

pesa tu said...

If there's another layer of a holding company between VKL and Vodafone Plc.Then Vodafone Plc only has to change ownership of the second co. to alter their stake in Safaricom.

If this Second Co. is registered overseas(or in a tax haven) We can never find the answers.
Go to this site to see a clearer chart
http://telebusillis.blogspot.com/2006/11/more-on-safaricom-and-vodafone-kenya.html

pesa tu said...

oops the link is
http://telebusillis.blogspot.com/2006/11/more-on-safaricom-and-vodafone-kenya.html

coldtusker said...

Pesa tu - Even Telebusillis thinks something stinks in Kenya...

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

If Mobitelea was "innocent" wouln't they be shouting it from the rooftops?

When Kenya Times or EA Standard complained about some airplane deal that KQ made... KQ immediately informed investors about the relationship between Simba Finance, IFC, Boeing, Imp-ex Bank & KQ...

Why??? KQ had nothing to hide!

Gathara said...

pesa tu,
Please see my post on this issue.

pesa tu said...

@Coldtusker: The aim of the post was to show how shareholder structure could be set up.
The questions of illegality will be up to the LEGAL AUTHORITIES

pesa tu said...

@Gathara:In reply to your post
http://gathara.blogspot.com/2006/11/safaricom-bitter-option.html

The assertion that "only the shareholders of the involved parties VKL, Vodafone Plc and Mobitelea Ventures ( as opposed to Telkom shareholder, Joe public) can. . . . be aggrieved"

is drawn from the fact that these are the only shareholders of the firms involved.
NOTE Telkom's 60% stake is still intact.

Legally only members of a company can seek and be provided info. on its activities.HINT-thats why Annual reorts are printed.

That's why(without malice to you) i called you ignorant, you failed to get the gist of my post.You dont understand basic Company Law or current Financial practice.

Here is the status of the firms involved for your understanding:
-Vodafone Kenya Ltd-Private Kenyan Registered company
-Mobitelea Ventures-Private firm, Domicile unknown
-Vodafone Plc-UK publicly listed company.

In the three companies mentioned above,in which company do we as the public(Kenyans) have shares?

Do read up on the topics i provided, they will serve you well.

P.s.The EAST AFRICAN also agrees with my shareholder structure.

coldtusker said...

We don't care about the shareholder structure as much as the impropriety...

The legal authority is the AG aka wako... under whose nose we had:

- anglo-fleecing
- navy procurements
- botched consitution
- mobitelea scam

These scams will continue as long as the fox guards the hen house!

Gathara said...

pesa tu,
Again you are avoiding comment on the ownership and registration issues I have raised.
1) Mobitelea Ventures Ltd, according to the East African, was at least till 2000, owned by Telkom. As of that year it was therefore effectively a public company, owned by Kenyans through Telkom. There is no evidence that it was subsequently sold (registration file's missing) or if so, to whom.

2)As of the same year (2000), Vodafone Kenya Limited was wholly owned by Vodafone Plc. If this changed, then the registration documents (which are public) should reveal this.

3)Since we are unaware of when and if Mobitelea Ventures was sold by Telkom and when and if it subsequently bought shares in VKL, there remains the possibility that those shares were purchased while Mobitelea was still owned by Telkom. In that case, they belong to the people of Kenya as they would have been procured using public money.

pesa tu said...

Gathara:Perhaps i was hasty in calling u ignorant.But facts like ur current comment were what i wanted.

My work is done.The aim of the post was to bring into light the corporate structure.

However, look at the corporate structure to see thel egal hurdles we have to cross.

Anonymous said...

http://www.marsgroupkenya.com/pages/stories/vodafone/index.php

Koimett is the total man's daughter, who just happens to be alleged co-owner of Mobitelea

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