The Safaricom deal also simplifies the management of two of Vodafone's biggest money-spinners in sub-Saharan Africa and promises to speed up the roll-out across the continent of mobile money transfer service M-Pesa, which was launched by Safaricom in 2007.
If the deal receives regulatory approval, Vodafone will retain a 5% stake in Safaricom, with the remaining 35% held by the Kenyan government.
The 34.6 billion-rand ($2.6 billion) deal, structured as an acquisition of the stake by Vodacom in return for new shares, is the latest move by Vodafone's chief executive Vittorio Colao to rationalise the group's disparate portfolio of interests around the world.
South Africa's Vodacom Group has published its consolidated annual results for the twelve months ended 31 March 2017, reporting a 1.5% increase in revenues year-on-year to ZAR81.278 billion (USD1.62 billion) from ZAR80.077 billion reported in FY2015/16.
Vodacom said buying into Safaricom gives it access to a market where Safaricom has a 71 percent share and demand is still growing for mobile phone services, including Safaricom's M-Pesa payments platform.
Vodacom CEO Shameel Joosub said that the deal would allow the operator, which is 65% owned by Vodafone, to "diversify our revenue growth and profitability".
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Vodafone has issued commitments to the Kenyan government to ensure "the ongoing success" of Safaricom. For its part, Nairobi-based Safaricom is under pressure from lawmakers and regulators because of its dominant position in the market, and is facing calls to split.
Analysts have previously said that M-Pesa, which has struggled to gain traction in some of the continent's more developed economies such as South Africa, doesn't hold much value for consumers who are already included in the formal banking sector.
Shares in Vodacom were up 0.2 percent at R153 at 1043 GMT, when Vodafone's shares were down 0.3 percent at 210 pence.
Vodacom also said Monday that full-year earnings per share excluding one-time items increased 4.5 per cent to 9.23 rand, broadly in line with estimates.
The group's service revenue increased 2.3% and group revenue was up 1.5% during the year under review, a reflection of the strategies the company had set for itself.
The company raised three-year targets for service revenue to mid-single digit per cent growth from low-to-mid single digits and earnings before interest and taxes to a mid-to-high single digit increase.