Just a bit of news.
WORLD AT SIX, NOVEMBER 3
A rebranded Vodacom?
Is Vodafone planning to wrestle with Telkom to control and rebrand local cellphone operator Vodacom? Telecoms analyst Dobek Pater examines the planned R16-billion deal on 'The World at Six'.
Bruce Whitfield:
The big story of the day is the announcement by Vodafone that it’s looking to buy a bigger stake in Vodacom. That is a story that is going to take up quite a considerable amount of our focus this evening. That news has been in the market for about the last two weeks or so. Vodafone is seeking to buy Vodacom, a stake held by VenFin, in a deal worth about R16-billion. It’s about half the size of the Absa deal, so it’s a significant amount of money. It would take Vodafone’s stake to 50 percent, alongside Telkom.
Dobek Pater joins us now. He is the telecoms analyst at Africa Analysis. He’s on the line to us now. Good evening, Dobek.
Dobek Pater:
Good evening, how are you?
Bruce Whitfield:
We’re very well, and quite excited after the news today. Vodafone was running quite a bizarre billboard campaign about a year ago in South Africa. Suddenly we know why.
Dobek Pater:
Well, I don’t know if we can necessarily know the truth. The billboard campaign was part of a strategy of Vodacom, which hasn’t quite panned out. They weren’t quite sure exactly which strategy they were following, because it was essentially called branding. Vodacom retained its brand for all the traditional products. And until you see the Vodafone brand for the 3G Vodafone Live, which is essentially a global product, rolled out across all Vodafone networks…
Bruce Whitfield:
Well, if it was an accident, it’s a spectacular coincidence, then. But they made that bid for the stake in VenFin. It looks like it’s going to be an interesting deal. Its worth about R16-billion for the stake that VenFin holds in Vodacom.
Dobek Pater:
Yes, it does. That’s a 15 percent stake in Vodacom, which then translates Vodacom’s market capital to over R107-billion, which is quite significant. It’s about twice what Absa’s is. And it’s a 20 percent appreciation from the last valuations of Vodacom, when it was hovering in the region of R80-billion.
Another interesting point is that if you look at shrewd, active subscribers in the Vodacom group, that translates into about $950 per subscriber, which is almost a 60 percent premium on what the average rate is in Africa. We normally look at $500-600 per subscriber in these types of purchases.
Bruce Whitfield:
Well, what’s interesting about this is, Vodafone obviously knows the Vodacom business very well. Up until now they’ve had a 35 percent stake. This is not a business that they’re going to overpay for. Clearly they still see value in the premium, even at this level.
Dobek Pater:
They certainly do. It all depends on what the joint strategy will be to go forward, or Vodacom’s strategy for further expansion in developing the African market. Or whether it’s going to concentrate, as it has done until now, more on the market at home. But it certainly tells of the value for Vodafone in the future.
Bruce Whitfield:
Let’s assume the deal happens. There are very few reasons why it shouldn’t happen. It puts Vodafone and Telkom as 50/50 shareholders in Vodacom. Does that make Vodacom’s life awkward? Having two sets of equally powerful shareholders?
Dobek Pater:
I don’t think it necessarily makes it awkward. It doesn’t quite give Vodafone what they would like. What Vodafone would like is a controlling stake, and then that would clear the way to re-brand Vodafone, which I still think is the ultimate goal to turn from blue into a red on the map.
I think Telkom will certainly be fighting. It’s not going to give up any of its shares. For Telkom it’s an extremely lucrative part of its group asset, and it will retain the 50 percent stake. I don’t exactly know what its position would be on any re-branding exercises.
Bruce Whitfield:
Can we anticipate that this is a strategy by Vodafone to basically use South Africa as a launch pad, to fully colonise sub-Saharan Africa and perhaps marry North African operations with the rest of Africa?
Dobek Pater:
Well, they are already present in sub-Saharan Africa. They have a stake in Kenya, which they haven’t relinquished to Vodacom or anyone else. But yes, I think that could be the beginnings of a greater Africa strategy, not only sub-Saharan strategy, but across Africa.
There seems to be a renewed interest globally in not only South Africa, but Africa in general, in the telecommunications sector, and other companies that have all of a sudden realised that an economy like the South African economy is going quite strongly, and therefore it’s worth taking another look and re-entering the market, or solidifying it’s position in the market.
Bruce Whitfield:
Dobek Pater, thank you very much indeed. The telecoms analyst at Africa Analysis.
WORLD AT SIX, NOVEMBER 3
A rebranded Vodacom?
Is Vodafone planning to wrestle with Telkom to control and rebrand local cellphone operator Vodacom? Telecoms analyst Dobek Pater examines the planned R16-billion deal on 'The World at Six'.
Bruce Whitfield:
The big story of the day is the announcement by Vodafone that it’s looking to buy a bigger stake in Vodacom. That is a story that is going to take up quite a considerable amount of our focus this evening. That news has been in the market for about the last two weeks or so. Vodafone is seeking to buy Vodacom, a stake held by VenFin, in a deal worth about R16-billion. It’s about half the size of the Absa deal, so it’s a significant amount of money. It would take Vodafone’s stake to 50 percent, alongside Telkom.
Dobek Pater joins us now. He is the telecoms analyst at Africa Analysis. He’s on the line to us now. Good evening, Dobek.
Dobek Pater:
Good evening, how are you?
Bruce Whitfield:
We’re very well, and quite excited after the news today. Vodafone was running quite a bizarre billboard campaign about a year ago in South Africa. Suddenly we know why.
Dobek Pater:
Well, I don’t know if we can necessarily know the truth. The billboard campaign was part of a strategy of Vodacom, which hasn’t quite panned out. They weren’t quite sure exactly which strategy they were following, because it was essentially called branding. Vodacom retained its brand for all the traditional products. And until you see the Vodafone brand for the 3G Vodafone Live, which is essentially a global product, rolled out across all Vodafone networks…
Bruce Whitfield:
Well, if it was an accident, it’s a spectacular coincidence, then. But they made that bid for the stake in VenFin. It looks like it’s going to be an interesting deal. Its worth about R16-billion for the stake that VenFin holds in Vodacom.
Dobek Pater:
Yes, it does. That’s a 15 percent stake in Vodacom, which then translates Vodacom’s market capital to over R107-billion, which is quite significant. It’s about twice what Absa’s is. And it’s a 20 percent appreciation from the last valuations of Vodacom, when it was hovering in the region of R80-billion.
Another interesting point is that if you look at shrewd, active subscribers in the Vodacom group, that translates into about $950 per subscriber, which is almost a 60 percent premium on what the average rate is in Africa. We normally look at $500-600 per subscriber in these types of purchases.
Bruce Whitfield:
Well, what’s interesting about this is, Vodafone obviously knows the Vodacom business very well. Up until now they’ve had a 35 percent stake. This is not a business that they’re going to overpay for. Clearly they still see value in the premium, even at this level.
Dobek Pater:
They certainly do. It all depends on what the joint strategy will be to go forward, or Vodacom’s strategy for further expansion in developing the African market. Or whether it’s going to concentrate, as it has done until now, more on the market at home. But it certainly tells of the value for Vodafone in the future.
Bruce Whitfield:
Let’s assume the deal happens. There are very few reasons why it shouldn’t happen. It puts Vodafone and Telkom as 50/50 shareholders in Vodacom. Does that make Vodacom’s life awkward? Having two sets of equally powerful shareholders?
Dobek Pater:
I don’t think it necessarily makes it awkward. It doesn’t quite give Vodafone what they would like. What Vodafone would like is a controlling stake, and then that would clear the way to re-brand Vodafone, which I still think is the ultimate goal to turn from blue into a red on the map.
I think Telkom will certainly be fighting. It’s not going to give up any of its shares. For Telkom it’s an extremely lucrative part of its group asset, and it will retain the 50 percent stake. I don’t exactly know what its position would be on any re-branding exercises.
Bruce Whitfield:
Can we anticipate that this is a strategy by Vodafone to basically use South Africa as a launch pad, to fully colonise sub-Saharan Africa and perhaps marry North African operations with the rest of Africa?
Dobek Pater:
Well, they are already present in sub-Saharan Africa. They have a stake in Kenya, which they haven’t relinquished to Vodacom or anyone else. But yes, I think that could be the beginnings of a greater Africa strategy, not only sub-Saharan strategy, but across Africa.
There seems to be a renewed interest globally in not only South Africa, but Africa in general, in the telecommunications sector, and other companies that have all of a sudden realised that an economy like the South African economy is going quite strongly, and therefore it’s worth taking another look and re-entering the market, or solidifying it’s position in the market.
Bruce Whitfield:
Dobek Pater, thank you very much indeed. The telecoms analyst at Africa Analysis.