Vodacom into Africa
Vodacom has finally made its big move into Africa—not with a cellphone deal, but with one in integrated telecommunications technology.
It will pay more then R5.3-billion for a pan-African communications services company in a deal that will immediately fast-forward its international expansion and diversify its business.
Vodacom’s CEO-designate Pieter Uys says the deal is part of Vodacom’s plan to execute its growth strategy.
“We have to do things now so that when things come to a plateau in the South African business in 18 to 24 months’ time, the strategy to grow geographically and horizontally will be well under way.”
The establishment of Vodacom Business — which is involved in Internet and network provision — earlier this year has been part of that strategy, as has the recent acquisition of 51% of Storage Technology Services, a company involved in data storage and security services.
But its geographical expansion has been somewhat dormant.
Vodacom has cellphone operations in Tanzania, the Democratic Republic of Congo, Lesotho and Mozambique; its attempts to enter Nigeria have so far been unsuccessful. It has not announced any new expansion into Africa for years and is often unfavourably compared with MTN, which has been growing aggressively in terms of its geographic roll-out into Africa and the Middle East.
This deal, however, finally positions Vodacom as a pan-African player.
It has bought the carrier services and business network solutions businesses of the privately owned Gateway Telecommunications SA, paying 675-million for the business and 25-million in relation to a bond raised by Gateway.
Gateway Communications is the largest independent provider of interconnection services via satellite and terrestrial network infrastructure for African and international telecommunications companies. It has voice and connectivity services available to customers in more than 40 African countries.
It has offices in 17 countries and its African network already connects more than 583million people across the continent.
Sales were 257-million in the year to December.
It is majority black-owned, and the Industrial Development Corporation also has a stake.
For Gateway, the deal would enable it to increase resources, efficiency and product range, CEO Peter Gbedemah said in a statement.
Uys says the acquisition serves to broaden Vodacom’s international presence in key markets in other African countries, and especially in Nigeria.
Multinational customers and international telecoms providers who are looking for African connectivity will now be able to get it through Vodacom.
The deal complements Vodacom’s business services strategy in SA and will enable it to roll out its services to other African countries.
It also gives Vodacom access to Gateway’s blue-chip customer base, which includes telecoms companies, and companies in the oil, banking, gas and retail sectors.
Uys says Vodacom has been looking for cellphone technology opportunities, but also at opportunities “in the converged IT space”.
Vodacom into Africa discussion
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