Nigerian springs Vodacom surprise
ONE of Nigeria’s wealthiest entrepreneurs has made a surprise bid to Telkom, proposing to create a pan-African telecoms giant by marrying Telkom’s 50% stake in Vodacom with Nigeria’s cellular operator Globacom.
The bid threatens to disrupt a plan already at an advanced stage for Telkom to shed its 50% stake in Vodacom by selling 12,5% to the UK operator Vodafone for R18,75bn and distributing the rest to its own investors.
The man behind the move is Mike Adenuga Jnr, who owns 100% of Globacom and has interests in real estate, the Equatorial Trust Bank and Conoil. Globacom serves 18-million subscribers, making it Nigeria’s largest operator after MTN. It also runs networks in Benin and Ghana. Adenuga has submitted his proposal to Telkom.
Mowana Investment is the local broker for the last-minute bid. Its director, Joe Fizelle, said the new deal offered far better prospects for Telkom shareholders than seeing Vodacom subsumed by Vodafone.
Fizelle hopes the proposal will be considered as he believes it offers value and growth potential to Telkom shareholders. The deal would see 100% of Globacom merge with Telkom’s 50% stake in Vodacom in a new listed entity dubbed “Vodaglo”, with an estimated value of R140bn.
Mowana believes Globacom and 50% of Vodacom are each worth about R70bn, and would be equal partners in Vodaglo.
Telkom’s fixed-line business would remain separately listed, but could work with the Nig- erian operator to fulfil Telkom’s goal of offering a blend of fixed and mobile services in numerous other African countries.
The deal would thwart Vodafone’s ambition to take control of Vodacom, but the UK operator could benefit by having Globacom as its Africa partner, Fizelle said.
Mowana hopes that the government, with a 39% stake in Telkom, will find the Nigerian offer more attractive than the idea of retaining a minority interest in Vodacom and seeing it become British owned.
Under the Nigerian offer, Telkom shareholders would hold stakes in both the fixed-line and mobile entities and enjoy pan-African growth from both, Fizelle said.
One analyst said Globacom’s proposal was interesting but unlikely. Talks with Vodafone had a high probability of success, he said, as the offer was generous to Telkom shareholders, and separating Vodacom out of Telkom would unlock the value of both entities.
He questioned whether Vodafone could block the attempt to merge Vodacom with Globacom. But Fizelle said Vodafone would not be able to stop the move as Globacom would be merging with only the 50% of Vodacom that was owned by Telkom.
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