Vodacom Group Ltd agreed to buy a majority stake in Vodafone Egypt from its UK parent for $2.7bn, expanding the South African carrier’s operations into the north of the continent.
The Johannesburg-based company, which is more than 60% owned by Vodafone Group Plc, will issue new shares to cover 80% of the cost of acquiring the Egyptian market leader, with the balance to be paid in cash, according to a statement.
The deal will allow Vodacom to expand beyond its key markets and present a greater challenge to arch rival MTN Group Ltd, the continent’s largest carrier. A key attraction of the Egypt market is that most of the 100mn population don’t use traditional banks, allowing Vodacom to roll out its lucrative mobile-money services, chief executive officer Shameel Joosub told reporters.
“There are significant opportunities to leverage our financial services platform,” he said. “We are not planning to do any more acquisitions of geographical territories – we are looking to grow our financial services around the continent.”
Vodacom shares rose as much as 3.8% in early trade in Johannesburg, the most in seven weeks, valuing the company at more than 259bn rand ($17bn).
For Vodafone, it allows the company to proceed with a plan to consolidate African operations under Joosub’s leadership. The British carrier had been looking at a potential sale of its majority stake in Vodafone Ghana to its South African partner, people familiar with the matter said earlier this year, though a deal has yet to materialise.
Telecom Egypt Co, the fixed-line incumbent, will remain the minority partner in Vodafone Egypt with a 45% stake. The state-owned company agreed to waive a rule that a mandatory offer be made for its shares in the event of a change in control, Joosub said.
Vodacom said the Egypt deal will boost its medium-term operating profit growth into double digits, and expects to announce an update to targets at full-year results next May.
Separately, Vodacom announced a deal on Wednesday to buy a minority stake in a vehicle housing South African fibre companies Vumatel Pty and Dark Fibre Africa Pty. The majority owner is a unit of Remgro Ltd, billionaire Johann Rupert’s investment firm.
Bloomberg News reported the deal was under discussion last year.
Source: https://www.gulf-times.com/story/704209/Vodacom-to-buy-Egypt-unit-from-its-UK-parent-in-2-