- Vodacom is buying a 55% stake in Vodafone Egypt, worth $2.738 billion (R41.3 billion)
- Vodacom CEO, Shameel Joosub, described Vodafone Egypt as an "attractive business" that is well-run and would add growth to the company's portfolio.
- Vodacom is also making a major move in South Africa's fibre market, linking up with Vumatel and Dark Fibre Africa.
Vodacom announced two major deals on Wednesday: it is buying a 55% stake in Vodafone Egypt, and it is also making a major move in South Africa's fibre market, linking up with Vumatel and Dark Fibre Africa.
It's buying the stake in Vodafone Egypt from the UK group Vodafone in a deal worth $2.738 billion (R41.3 billion), with 80% of the payment settled in new Vodacom shares, while the rest will be paid in cash.
Vodacom CEO, Shameel Joosub, described Vodafone Egypt as an "attractive business" that is well-run and would add growth to the company's portfolio.
In January 2020, Vodafone Egypt entered into a non-binding agreement with Saudi Telecom Company (STC) regarding the sale of its 55% shareholding, but the process was later terminated in December. Joosub stated that the collapse of the talks opened the door for Vodacom for the shares.
"We saw it as an opportunity for us to swoop in and do the deal. We think it is a highly attractive asset, given its market share, the position of the market and the margin that the business is achieving and its potential," said Joosub.
The other 45% of the company is in the hands of the state-owned Telecoms Egypt.
"It is a quality asset and has been well-run and there is an opportunity for us to do more. I think it would be transformational in our stable and it simplifies the portfolio."
Launched in 1998, Vodafone Egypt is the biggest mobile network operator in that country, with 43 million customers - or 40% of the market and holds a strong network leadership position. The operator is also the country's largest mobile wallet provider through Vodafone Cash.
In addition, Vodacom announced that it has entered into agreements to acquire a co-controlling interest in the assets of Community Investment Ventures Holdings (CIVH), the owners of Vumatel and Dark Fibre Africa (DFA).
When the deal is completed, pending certain conditions, Vodacom will ultimately own a 30% equity interest in a new entity called InfraCo, which will also include Vodacom’s fibre assets.
"CIVH will hold a 70% co-controlling interest in InfraCo and existing CIVH investors including Remgro Limited and New GX Investments (Pty) Ltd will remain invested in CIVH,” Vodacom said in an announcement.
Vumatel’s fibre network serves 1.2 million homes, and it has deployed over 31 000km of fibre infrastructure across the country. DFA owns and operates a long distance fibre network spanning in excess of 13 000 km and 37 000 connected circuits.
Vodacom said the investment will "accelerate South Africa’s fibre reach, network quality and resilience, fostering economic development and help bridge South Africa’s digital divide in some of the most vulnerable parts of our society".
"Through Vodacom's investment, InfraCo would accelerate and expand its lower and middle- income product offering to deliver affordable high-speed broadband access to a broader population segment, including small and medium sized enterprises," the telecoms giant said.
Vodacom’s capital injection and strategic support will further accelerate the growth trajectory of InfraCo’s fibre assets. The contribution of Vodacom’s assets will add scale and enhance Vumatel and DFA’s fibre footprint.