Vodafone in talks to up Vodacom stake

LONDON – UK-based mobile phone giant Vodafone Group Plc has begun exclusive talks to top up its stake in South Africa’s largest cell phone operator Vodacom to 50 per cent for 16 billion rand.

Vodafone, the world’s largest mobile phone company by revenue, said yesterday the deal would boost its exposure to fast-growing South Africa as well as Tanzania, the Democratic Republic of Congo, Lesotho and Mozambique. The two-part deal, which is expected to close in the first quarter of 2006, will see Vodafone’s stake in Vodacom rise to 50 per cent from 35 per cent and give it equal rights on the board with co-shareholder Telkom.Vodafone said it planned to buy a 46,5 per cent voting interest and eight per cent economic interest in Vodacom’s 15 per cent shareholder VenFin from controlling investor Rembrandt Trust and mop up any remaining ordinary VenFin shares at up to 47,25 rand per share.Vodafone, which has a strategy to increase minority stakes in growth markets and has long been expected to make its move in South Africa, said it would immediately start buying VenFin stock in the open market.”That’s an excellent deal for Venfin, the price is excellent and there is a high likelihood it (deal) would go through.I would be surprised if a lot of shareholders don’t take it up,” said Old Mutual Asset Managers telecoms analyst Steve Minnaar.”It is also good for (Vodacom rival) MTN and Telkom to have a solid market valuation for Vodacom.The offer price shows these firms’ shares are undervalued relative to Vodacom, and that’s why they are also running.”If it secures the deal, the British-based company said it would sell all VenFin assets and liabilities other than its Vodacom stake to a new company, that will be owned by existing VenFin shareholders, for five billion rand.Vodafone has been keen to increase its stake in South Africa, the continent’s largest economy in which about 57 per cent of the population of 47 million own mobile phones.Vodacom, which has about 17,2 million customers across Africa – including 14,3 million in South Africa – saw customer numbers grow 39 per cent in the 12 months to June, while core earnings (EBITDA) jumped 24 per cent and revenues climbed 20 per cent in the year to March 2005.Vodafone said the acquisition, which will require regulatory approval, would have no impact on its share buyback programme or credit ratings and the company’s shares edged 0,3 per cent higher to 150 pence.-Nampa-ReutersThe two-part deal, which is expected to close in the first quarter of 2006, will see Vodafone’s stake in Vodacom rise to 50 per cent from 35 per cent and give it equal rights on the board with co-shareholder Telkom.Vodafone said it planned to buy a 46,5 per cent voting interest and eight per cent economic interest in Vodacom’s 15 per cent shareholder VenFin from controlling investor Rembrandt Trust and mop up any remaining ordinary VenFin shares at up to 47,25 rand per share.Vodafone, which has a strategy to increase minority stakes in growth markets and has long been expected to make its move in South Africa, said it would immediately start buying VenFin stock in the open market.”That’s an excellent deal for Venfin, the price is excellent and there is a high likelihood it (deal) would go through.I would be surprised if a lot of shareholders don’t take it up,” said Old Mutual Asset Managers telecoms analyst Steve Minnaar.”It is also good for (Vodacom rival) MTN and Telkom to have a solid market valuation for Vodacom.The offer price shows these firms’ shares are undervalued relative to Vodacom, and that’s why they are also running.”If it secures the deal, the British-based company said it would sell all VenFin assets and liabilities other than its Vodacom stake to a new company, that will be owned by existing VenFin shareholders, for five billion rand.Vodafone has been keen to increase its stake in South Africa, the continent’s largest economy in which about 57 per cent of the population of 47 million own mobile phones.Vodacom, which has about 17,2 million customers across Africa – including 14,3 million in South Africa – saw customer numbers grow 39 per cent in the 12 months to June, while core earnings (EBITDA) jumped 24 per cent and revenues climbed 20 per cent in the year to March 2005.Vodafone said the acquisition, which will require regulatory approval, would have no impact on its share buyback programme or credit ratings and the company’s shares edged 0,3 per cent higher to 150 pence.-Nampa-Reuters