AFTER months of negotiations, Vodafone will take control of Vodacom.<\/p>\n
Vodafone, the world’s biggest mobile phone group by revenue, will buy a further 15percent stake of South Africa’s biggest mobile phone group from Telkom, putting an end to the dysfunctional love triangle. It will pay R22.5-billion.<\/p>\n
Vodacom, which was owned equally (50percent each) by Telkom and Vodacom, has long been stifled by a shareholders’ agreement that prevented it expanding meaningfully into Africa. Despite being the first to launch a mobile consumer service, it has been overtaken in the rest of Africa by MTN, which now operates in 21 countries, including in the Middle East.<\/p>\n
The deal is subject to approval by 75percent of shareholders, the competition authorities and the Independent Communications Authority of South Africa. <\/p>\n
It gives the UK-based Vodafone group a controlling 65percent stake in Vodacom and will allow Vodacom to list on the JSE.<\/p>\n
Reuben September, Telkom’s chief executive, said yesterday: “The retained portion of the proceeds from the disposal will accelerate the development of our mobile and data strategies while also allowing us to expand selectively our geographic presence.” <\/p>\n
Telkom will distribute 50percent of the cash to its shareholders and retain the remainder for investment projects that September said would be “disciplined”.<\/p>\n
He said he expected the entire process, including the dividend payment, to be completed in the first half of next year.<\/p>\n
The deal is expected to allow both Vodacom and Telkom the freedom to operate in all geographic areas and provide all possible services.<\/p>\n
The previous shareholders’ agreement prohibited Vodacom from expanding into countries where Vodafone was active. That limited the number of locations to five countries. <\/p>\n
Also, Telkom was not allowed to provide mobile services in African countries south of the equator in competition with Vodafone. The arrangement was a source of much tension, regularly voiced by retired Vodacom chief executive Alan Knott-Craig.<\/p>\n
Vittorio Colao, Vodafone’s chief executive, could not hide his delight at the prospect of gaining a dominant position over Vodacom.<\/p>\n
“We will continue to support the management team in their strategy of transforming Vodacom into a full service provider in Africa. We are confident that the transaction will deliver value to our shareholders,” Colao said.<\/p>\n
Rajay Ambekar, an analyst at Cadiz Asset Management, said the transaction placed a premium value of R150-billion on Vodacom.<\/p>\n
He said: “If Vodacom lists, it will probably end up having far less value — around R100-million — in market cap. Vodafone paid a premium for shareholder control.<\/p>\n
“Shareholders will more than likely accept the offer next year. The government and Public Investment Corporation [with combined shareholding of more than 50percent] have already given their support.” <\/p>\n
Lindsey McDonald of consultancy Frost and Sullivan said: “There seems to have been constant disagreement of how to carry the company forward.<\/p>\n
“However, I don’t think Vodacom will be rebranded. This [would] cause confusion.”<\/p>\n