Vodafone takes control of Vodacom

UK-based operator Vodafone said Thursday that its Rand22.5bn ($2.5bn) bid for a further 15 per cent stake in South African operation Vodacom has been accepted.

The move takes Vodafone’s holding in Vodacom to 65 per cent, and allows the Big V to realise its long standing aim of taking control of the African operator.

Vodacom was originally set up as a 50/50 joint venture between Vodafone and local carrier Telkom, creating an attractive asset with strong market positions in South Africa, Democratic Republic of Congo, Lesotho, Mozambique and Tanzania.

The two firms has been in fruitless discussion over Telkom’s exit for some time, with this latest successful deal hinging on Telkom’s agreement to unbundle its remaining stake of 35 per cent in Vodacom to Telkom shareholders.

Telkom’s two largest shareholders, the government of South Africa and the Public Investment Corporation, have committed to vote in favour of the transaction and will become significant shareholders in Vodacom following the completion of the transaction.

As a result of accounting for Vodacom as a subsidiary, Vodafone will fully consolidate Vodacom’s results, however the company has agreed with the local government that the Vodacom brand will remain visible on the African continent. In addition, Vodafone has agreed that Vodacom will be the exclusive investment vehicle through which it will make acquisitions in sub-Saharan Africa, excluding Ghana and Kenya where Vodafone is already present.