Vodafone gets another go
UK-based telecoms company Vodafone could get another chance to gain control of Vodacom, South Africa’s largest cellular network operator, after Oger Telecom said it had made an offer to buy a stake in Telkom.
Telkom, which until recently had a monopoly in the local fixed-line business, has been wanting to end its rocky partnership with Vodacom without losing its presence in the lucrative cellphone business.
The company is reviewing its 50 percent stake in Vodacom and is expected to sell the shareholding as soon as it clinches a deal with another cellular partner.
Vodafone, which owns the remaining half of Telkom, has pre-emptive rights to buy the fixed-line operator’s stake in Vodacom and is keen on expanding its presence in growing emerging markets.
Vodafone’s plans to gain control of Vodacom were dashed last year after Telkom terminated talks to sell part or all of its fixed-line business to MTN, Vodacom’s rival.
The deal was scuppered when Telkom ended the talks, citing high costs associated with the sale. Vodafone’s bid for control hinged on Telkom securing a deal with MTN.
An Oger Telecom buy into Telkom could result in a close working relationship with Cell C, giving the two companies access to each other’s networks and customers.
Telkom will be able to offer bundled fixed-line and cellular services and products to clients.
Dubai-based Oger Telecom is owned by Saudi Oger, which has a 60 percent stake in Cell C, South Africa’s smallest cellular network operator with just over 3 million subscribers.
Oger will use some of the $2.6 billion (R18.5 billion) cash from the sale of a 35 percent stake to Saudi Telecom to fund the Telkom purchase.
Paul Doany, the chief executive of Oger Telecom, said the company had submitted an offer, which “we believe to be in the interest of both Telkom and our Cell C”. He added that Oger had made a “pro-competitive move” and hoped Telkom would look at it favourably.
Telkom’s share price soared 7.44 percent to close at R135.11 on the news, giving it a market value of R71.9 billion.
Telkom, which is headed by Reuben September, confirmed yesterday that it had received a “non-binding” offer from Oger Telecom.
The company said that while not in discussions with Oger Telecom, it would review its offer along with other alternatives as part of its cellular strategy review.
Citigroup said a partnership with Oger Telecom might offer Telkom control of a cellular asset, offer growth off a lower base, and improve Cell C’s distribution channel using Telkom’s nationwide footprint.
But the snag for Telkom was that Cell C had liabilities and was in a net negative equity position, Citigroup said.
Vodafone’s acquisition of more shares in Vodacom will result in the firm’s listing on the JSE through an initial public offering estimated at R45 billion.
Dobek Pater, an analyst at Africa Analysis, did not think that a cross-ownership between Cell C and Telkom was a prerequisite for an alliance between the companies.
He also questioned Cell C’s attractiveness as a partner. “Why not rather try and make the Vodacom-Telkom relationship work?” he suggested.
Oger Telecom, controlled by the family of the late Lebanese prime minister Rafik al-Hariri, operates in Saudi Arabia, Lebanon and Jordan, providing fixed-line, cellular and internet services.
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