Shareholders in SA’s largest mobile operator have approved a deal to buy a controlling stake in the Egyptian unit of parent Vodafone for $2.73bn (R41bn), in a cash and share deal that aims to expand the group’s footprint into Northern Africa for the first time.
“This is an exciting and important milestone for Vodacom as the acquisition of Vodafone Egypt will be transformational in our evolution from a telecommunications company to a technology company,” said Vodacom Group CEO Shameel Joosub, following the shareholders’ vote at a general meeting on Tuesday.
All resolutions at the meeting concerning the deal passed with 99%, or more, approval from the investors.
The transaction is expected to be concluded by the end of March, having been first announced back in November. However, certain approvals from the JSE, the National Telecom Regulatory Authority of Egypt and Egypt’s Financial Regulatory Authority, still need to be secured for it to be finalised.
With voice revenues on the decline and data margins continually being squeezed, operators across the sector, such as MTN and Telkom, are all working to make the shift, banking on areas such as mobile money and e-commerce services for growth.
“This is a transaction that presents significant diversification and growth opportunities for our shareholders. With over 80% of Egypt’s 100-million population unbanked, Vodacom sees enormous potential to leverage our financial services platforms, global partnerships and best practices in a significant market,” said the Vodacom boss.
Eighty percent of the offer consideration will be settled by the issue of 242-million new Vodacom shares — about 13% of the group’s issued share capital worth about R32.85bn — and $548m through cash.
The share swap will increase Vodafone’s stake in Vodacom to 65.1% from 60.5%.
Vodacom said the acquisition of Vodafone Egypt, the market leader in the country with more than 40% market share and 38-million prepaid users, would accelerate its medium-term operating profit growth potential into double digits.
The deal will put Vodacom in a stronger position to challenge its closest domestic rival, MTN, whose aggressive expansion — sometimes in risky markets where others feared to tread — made it the continent’s biggest mobile network operator.
It also hands Vodacom a market of 100-million people in Egypt, where more than 60% of the population do not have bank accounts at a time when mobile phone operators are looking at financial services as the next growth area.
After the acquisition, Vodacom will cover a population of more than 500-million and more than 40% of Africa’s GDP, across Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Lesotho, Mozambique, SA and Tanzania.
In addition to the Egypt transaction, Vodacom is also working to complete its recently inked a R13bn deal with Remgro’s Community Investment Ventures Holdings unit to expand its fibre portfolio.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.