LONDON/JOHANNESBURG - The world's biggest mobile phone group, Vodafone Group Plc, has announced that it plans to acquire 15 percent of South Africa’s Vodacom Group Ltd, in order to expand its presence in Africa's biggest economy. Vodacom happens to be South Africa's largest cell phone group.
The deal, if it does go through, would cost Vodafone 16 billion rand ($2.4 billion). The UK-based mobile giant said that the acquisition of 50 percent of Vodacom would give it a joint control of the company along with South African fixed-line carrier Telkom. It would also pave the way for Vodafone to tap into the mobile market in South Africa, Tanzania, the Democratic Republic of Congo, Lesotho and Mozambique. Currently, Vodafone is in extensive talks with Rembrandt Trust, the South Africa-based investment company, which owns a 15 percent stake in Vodacom through a holding vehicle called VenFin. VenFin shares jumped 29 percent to 46.91 rand in the backdrop of this news.
Old Mutual Asset Managers telecoms analyst Steve Minnaar said, "That's an excellent deal for VenFin, the price is excellent and there is a high likelihood it (deal) will go through. I would be surprised if a lot of shareholders don't take it up. It is also good for MTN and Telkom to have a solid market valuation for Vodacom. The offer price shows these firms' shares are undervalued relative to Vodacom, and that's why they are also running."
Vodafone said that its move to Africa "was consistent with Vodafone’s strategy of increasing its exposure to growth markets." Last week, Vodafone brought a 10 percent stake in Bharti, India's largest mobile phone operator for £820 million and it has indicated an avid interest in increasing the same. Vodafone also brought Oskar Mobil, the Czech Republic's third largest operator and the remaining 79 percent of Mobifon of Romania.
That deal cost the Newbury, England-based Company £2.3 billion. Analysts say that Vodafone's aggressive entry into emerging markets is a signal of the things to come.
Posted
on : Fri, 04 Nov 2005 10:25 GMT | Business News
By : Mike Lawson
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