VODACOM has disclosed a R41 billion plan to acquire a majority stake in Vodafone Egypt from parent company Vodafone Group.
· The bid follows the Vodafone Group’s proposal to simplify the management of its African footprint.
· According to Vodafone’s statement, it had agreed to transfer its 55 percent shareholding in Vodafone Egypt to its sub-Saharan subsidiary Vodacom.
VODACOM has disclosed a R41 billion plan to acquire a majority stake in Vodafone Egypt from parent company Vodafone Group. The bid follows the Vodafone Group’s proposal to simplify the management of its African footprint. According to Vodafone’s statement, it had agreed to transfer its 55 percent shareholding in Vodafone Egypt to its sub-Saharan subsidiary Vodacom. For a while, Vodafone has been placing its African assets under the control of Vodacom. In 2017 it transferred its 35 percent stake in Kenyan mobile network Safaricom to Vodacom.
The company plans to fund the acquisition by issuing 242 million new ordinary shares at R135.75 per share and R8.2 billion in cash. The proposed value of the transaction is estimated around R41bn or $2.738bn, the investors were informed. Vodacom is likely to cut its dividend policy by 15 percent as a result of the deal.
Speaking about the transaction, Vodacom chief executive Shameel Joosub said that given the margin, growth potential and financial services penetration, Vodafone Egypt was an attractive asset. He informed the shareholders that the deal offers an opportunity for revenue and profitability diversification and the potential to raise the group’s medium-term operating profit growth into double digits. He informed that a majority stake in Vodafone Egypt would consolidate Vodacom Group’s position as Africa’s leading telco by strengthening strategic connectivity and financial services. It will also raise Vodacom’s total population coverage in Africa to more than half a billion people. Vodafone Egypt enjoys a 43 percent revenue market share in Egypt, offering a bouquet of telecom services such as voice, data and mobile money services to 43 mn customers. The company also has plans to launch the VodaPay platform in Egypt.
.The transaction expected to be closed by March 31, 2022, is subject to a number of conditions, including clearance from the Financial Surveillance Department of the South African Reserve Bank and approval from the National Telecom Regulatory Authority of Egypt. It is reported that Vodacom had received an in-principle letter of support to vote in favor of the proposed transaction from Public Investment Corporation (PIC) and YeboYethu Investment Company, the major shareholders in the company.
