Trends & Forecasts

Vodafone to gain control of Vodacom

In a further move towards the consolidation of wireless network operators into fewer, globally recognised players, Vodafone announced today it has agreed to acquire an additional 15% stake in Vodacom from Telkom South Africa. The deal is costing Vodafone around US$2.25bn in cash and increases Vodafone's shareholding in Vodacom from 50% to 65%...
 In a further move towards the consolidation of wireless network operators into fewer, globally recognised players, Vodafone announced today it has agreed to acquire an additional 15% stake in Vodacom from Telkom South Africa. The deal is costing Vodafone around US$2.25bn in cash and increases Vodafone's shareholding in Vodacom from 50% to 65%. 
The deal is subject to approval of Vodacom's shareholders but there would seem to be little doubt this will be obtained as the two largest, the South African Government and Public Investment Corporation have both already committed their support. The new company will be demerged from Telkom and floated on the Johannesburg stock exchange. 
Much more interesting is what the agreement indicates about Vodafone's plans in Africa - Vodacom has operations in the Democratic Republic of Congo, Lesotho, Mozambique and Tanzania as well as in South Africa. Commenting on the agreement Vittorio Colao, Chief Executive of Vodafone, said: "As a long-term investor in South Africa we are delighted to be increasing our shareholding in Vodacom Group. We will continue to support the management team in their strategy of transforming Vodacom into a full service provider in Africa and also look forward to playing a greater role in delivering the broader social benefits of mobile telecommunications in the continent."  
There is little doubt that Vodafone will want to use the control it will get to sharpen up operations to compete against other regional operators, in particular Zain. This raises the question of whether the Vodacom network will be rebranded as Vodafone. In a global world the benefits seem obvious, a point which Zain has not missed.  
In the short term it would appear no change will take place as Vodafone has agreed with the Government of South Africa to keep the Vodacom identity visible on the African continent in view of the high level of brand recognition. But this doesn't mean no rebranding and we wouldn't be surprised to see an early change, even before the end of the 12 month period following completion of the deal, when the South African government is committed to remain a shareholder in the new company.


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