Vodafone seals Vodacom deal, but faces new competition

After months of speculation Vodafone has acquired control of the South African-based Vodacom for US$2.48 billion. The investment gives Vodafone control of South Africa's biggest mobile operator, together with a vital foothold in booming African markets and signals its intent to keep pace with its rival Orange where France Telecom's emerging markets play is concentrated.

If the deal goes ahead, which would see Vodafone owning 65 per cent of operations in South Africa, Democratic Republic of Congo, Lesotho, Mozambique and Tanzania, the company could face increased competition from its former parent, Telkom South Africa.

Up until now Telkom's shareholder agreement limited its ability to offer mobile services. However, this could now change with a new shareholder dispensation enabling Telkom to target the rapidly expanding market for broadband and mobile data services.

Commenting on the acquisition, John Delaney, research director at IDC, said that the investment was an indication that Vodafone's new CEO, Vittorio Colao, was evidently intent on maintaining the momentum in Vodafone's drive to spread the red rectangle around the globe.

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