Vodacom is to take a 34.94 per cent stake in Kenyan operator Safaricom from parent company Vodafone Group for ZAR35 billion ($2.6 billion), in a move designed to bolster the South African operator’s presence in East Africa.

The deal sees Vodafone simplify its holdings in the continent by divesting the sizeable stake in Safaricom, described in a Vodacom statement as “a prized asset on the African continent”.

Vodafone, which owns 65 per cent of Vodacom, will be left with a 5 per cent stake in Safaricom should the all share transaction be approved by regulators. The Kenyan government holds the remaining 35 per cent.

In its statement, Vodacom talked up Safaricom’s mobile money platform, m-Pesa, which has more than 19 million customers.

Combined, Vodacom said it will now have 32 million customers in the space, “making it a formidable player in financial services on the continent”. The deal also gives Vodacom a significant footprint in Kenya.

Shameel Joosub, CEO of Vodacom said the transaction provides a unique opportunity to “diversify our revenue growth and profitability”.

“Acquiring a strategic stake in Safaricom will provide our shareholders with access to a high growth, high margin, high cash generation business operating in a high growth market,” he said, adding: “In addition to producing mutually beneficial opportunities for growth, it will create further incremental value through close cooperation between the two businesses, particularly in driving m-Pesa adoption across our operations.”

The deal value represents a 5.9 per cent discount on Safaricom’s share price at the close of trading of the Nairobi Securities Exchange on Friday.

Joosub described the price as “attractive for access to an additional 28 million customers”.

News of the deal comes as Vodacom also announced its fiscal year 2017 financial numbers, covering the period to 31 March 2017.

Net profit grew from ZAR12.9 billion in fiscal year 2016 to ZAR13.1 billion in the recent period, while revenue increased 1.5 per cent to ZAR81.3 billion.

Safaricom is Kenya’s largest operator, according to GSMA Intelligence, with more than 26 million connections. Airtel Kenya is the closest competitor, with more than 6 million connections.

In March the Communications Authority of Kenya dismissed speculation it would seek to force Safaricom to split its mobile business from m-Pesa, despite a report commissioned by the authority from Analysys Mason recommending the move.