Vodafone acquires 70% stake in Ghana Telecom from the government for $900M

July 3, 2008

2 Min Read

NEWBURY, U.K. -- Vodafone1 announces today that it has agreed to acquire a 70% stake in Ghana Telecommunications Company Limited (“Ghana Telecom”), a leading telecommunications operator in Ghana, from the Government of Ghana for a total consideration of US$900 million (£452 million), on a debt-free, cash-free basis, implying a total enterprise value for Ghana Telecom of approximately US$1.3 billion (£646 million). The Government of Ghana will retain a 30% stake in the company.

Commenting on the transaction, Arun Sarin, Chief Executive of Vodafone, said:

“Ghana is one of the most attractive markets in Africa with mobile subscribers growing at more than 55% p.a. and mobile penetration around 35%. Our extensive operating experience together with our portfolio of products and services position us well to deliver a superior mobile experience to Ghanaian customers and significantly improve financial performance. I expect that our investment will generate substantial benefits for Vodafone and for the Ghanaian economy and we are delighted that we will be working in partnership with the Government of Ghana.”

Strong strategic rationale and turnaround opportunity

The principal benefits to Vodafone are:

  • Exposure to the attractive and growing Ghanaian telecommunications market

    • total population of 24 million with more than 50% under the age of 25

    • real GDP growth of 6.3% in 2007, contained inflation and a stable political background

    • low mobile penetration at c.35%, with 2.7 million subscribers added in 2007

    • significant additional growth prospects from recent oil field discoveries

  • Majority control of the number 3 mobile player and leading fixed-line operator

    • number 3 mobile player with approximately 17% market share and 1.4 million customers as at 31 March 2008

    • leading fixed line and broadband operator with c.99% of the total number of lines and c.90% market share of the retail ADSL market

    • revenue growth of 9.3%2 in the 12 months ended 31 December 2007 to US$290 million and a 2007 reported EBITDA of US$42 million

  • Substantial turnaround potential

    • Over the next 5 years, Vodafone expects Ghana Telecom to invest over US$500 million in its operations and network, restoring and expanding network coverage and completing and integrating the fibre backbone

    • Vodafone plans to leverage its experience of rapid network deployment in India and other emerging markets, its brand and successful customer propositions such as M-PESA and ultra-low cost handsets, to accelerate Ghana Telecom's growth

    • Through these actions, Vodafone intends that Ghana Telecom will deliver a superior product and service offering in the Ghanaian market and thereby raise its mobile market share over time to around 25%, reversing recent underperformance

Other transaction details

As part of the transaction price, it has been agreed that the Government of Ghana’s fibre network assets will be transferred to Ghana Telecom.

The transaction remains subject to certain closing conditions, including approval from the Ghanaian Parliament. Vodafone expects the transaction to close in the third quarter of calendar year 2008.

Vodafone Group plc (NYSE: VOD)

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