Vodafone Offers $2.5B for Vodacom Stake

Vodafone finally makes an offer to Telkom SA to gain a majority stake in South African mobile operator Vodacom

Michelle Donegan, Contributing Editor, Light Reading

October 9, 2008

1 Min Read
Vodafone Offers $2.5B for Vodacom Stake

Vodafone Group plc (NYSE: VOD) has offered ZAR22.5 billion (US$2.5 billion) to Telkom SA Ltd. (NYSE/Johannesburg: TKG) to gain a majority stake in Vodacom Pty. Ltd. , South Africa's largest mobile operator.

Currently, Vodafone and Telkom SA each own 50 percent of Vodacom. Now, Vodafone has offered $2.5 billion in cash, minus any debt at the time of signing, to buy an additional 15 percent holding from Telkom SA, which would give the British-based operator a 65 percent stake in Vodacom. (See Top Ten: Emerging Markets Carriers.)

The deal is subject to Telkom SA disposing of its remaining 35 percent shareholding in Vodacom through a listing on the JSE Securities Exchange.

For Vodafone, the increased ownership of Vodacom would give it a stronger position in several African markets, including South Africa, Democratic Republic of Congo, Lesotho, Mozambique, and Tanzania. (See Vodafone Eyes Emerging Acquisitions.)

Vodafone has been working on this deal for some time and is clearly keen to increase its footprint in Africa. The operator shelled out $900 million for a 70 stake in Ghana Telecom in July.

And new CEO Vittorio Colao recently restructured Vodafone's emerging markets business unit to focus on growth in regions such as Central Europe and Africa. (See Vodafone Buys Into Ghana for $900M, VOD Nears Ghana Deal, Carrier Scorecard: Vodafone, Vodafone Turns Attention to Poland, Colao Revamps Vodafone Team, and Vodafone Names Execs.)

In a statement issued today, Telkom said that its board of directors, as well as the South African government, support Vodafone's proposal.

— Michelle Donegan, European Editor, Unstrung

About the Author(s)

Michelle Donegan

Contributing Editor, Light Reading

Michelle Donegan is an independent technology writer who has covered the communications industry on both sides of the Pond for the past twenty years.

Her career began in Chicago in 1993 when Telephony magazine launched an international title, aptly named Global Telephony. Since then, she has upped sticks (as they say) to the UK and has written for various publications, including Communications Week International, Total Telecom, Light Reading, Telecom Titans and more.

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