Vodacom

Vodafone prepares African expansion plans

Paul Rasmussen — Fri, 22 May 2009 11:06:01 -0400

The CEO of Vodacom has dropped strong hints Vodafone, which recently gained control of the South African-based company, plans to use the mobile operator as a platform to make further headway into other countries on the continent.

This seemingly goes against recent statements from Vodafone's CEO, Vittorio Colao, who said that "while emerging markets are of interest to us, our primary focus will remain on driving results from our existing assets."

However, Vodacom CEO, Pieter Uys, claimed Vodafone had committed to use Vodacom to enlarge its sub-Saharan business and provide support on potential acquisitions: "If you look at the world there aren't many growth opportunities around; Africa is one of them."

Uys believes that, given the Vodafone size and brand, it will be able to participate in cell phone markets that need to undergo consolidation. He pointed to the DR Congo as an example where a country cannot sustain nine mobile operators, but only has a penetration of around 12 per cent.

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Cellular News

Is Vodafone eying Nigerian opportunity?

Paul Rasmussen — Fri, 20 Mar 2009 14:44:42 -0400

Having expressed more than a passing "interest" in Nigeria last November, Vodafone's CEO, Vittorio Colao, might be keen to better understand the offer for bids for the former monopoly Nigerian telecoms operator Nitel. The government, and the existing major shareholder, Transcorp, have agreed to "select a new core investor who would have the requisite operational, managerial, technical and financial resources to take over Nitel (fixed) and its mobile subsidiary, Mtel."

Albeit that Colao noted the country was one of very few such large markets with a decent GDP, young population and "the classic conditions for being interesting for Vodafone," Nitel is not without its issues.

Nigeria came close to selling Nitel in late 2005 to Egypt's Orascom Telecom, which had experience in countries with infrastructure problems, but rejected the firm's US$256 million offer as too low. The local company Transcorp then acquired 51 per cent of Nitel for US$500 million in August 2006, but the telco's infrastructure had deteriorated so badly due to corruption and mismanagement that Transcorp could not raise the cash to turn it around.

The upside for Vodafone is that Nigeria has overtaken South Africa as Africa's biggest mobile market with more than 62 million subscribers, with a mobile penetration rate of just 42 per cent and a population of 150 million people. However, likely rivals include South Africa's Telkom, which is in the process of selling its 50 per cent stake in Vodacom to Vodafone, and would have a war chest of more than 10 billion rand and has stated an intention to become Africa's leading telecoms provider; the South African cell phone operator MTN's Nigerian unit has recently stated it could make further acquisitions as it grows in Nigeria.

However, the company also requires considerable rebuilding. Since Transcorp took over the management of the now heavily indebted Nitel it has lost the majority of its fixed-line users--now less than 100,000--and almost all of its 1.3 million mobile subscribers.

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Your Communication

Vodafone seals Vodacom deal, but faces new competition

Paul Rasmussen — Fri, 10 Oct 2008 10:47:12 -0400

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.

For more on this story:
- go to telecoms.com

Related articles:
Vodafone in bidding war for South African Telkom. Vodafone story
Emerging markets too pricey, says Vodafone chairman. Vodafone story

Vodafone's African ambitions threatened

Paul Rasmussen — Fri, 29 Aug 2008 11:15:00 -0400

Having been successful in acquiring a majority holding in Ghana Telecom--despite very public protests, Vodafone's objective to acquire control of the giant South African-based operator Vodacom has been challenged by a fresh bidder.

While details remain sketchy, and possibly questionable, Nigeria's second national operator, Globacom, is reported to have tabled a bid to create a 140 billion (SA Rand) pan-African telecoms firm labelled ‘Vodaglo'.

Telkom South Africa, the controlling holder of Vodacom shares (Vodafone holds a 50 percent stake), would only say it had been approached by "companies interested in one or more components" of its business and was not in any talks beyond those already disclosed--presumably a reference to Vodafone and South Africa's Mvelaphanda Holdings.

Globacom has around 12.5 million subscribers in Nigeria and also operates in Benin and Ghana. Its biggest competitor is South African-based MTN--the biggest provider in Nigeria.

While it would appear unlikely that Globacom has the muscle to successfully mount a bid, it might just attract Vodafone's attention to make a reverse takeover of the upstart Nigerian operator given the company's failure to make an acquisition in Africa's most populous nation.

For more on this story:
- go to ITWeb and Telegeography

Related articles:
Vodafone in bidding war for South African Telkom. Vodacom story
Emerging markets too pricey, says Vodafone chairman. Emerging markets viewpoint

Emerging markets too pricey, says Vodafone chairman

Paul Rasmussen — Wed, 30 Jul 2008 10:31:29 -0400

Having reported disappointing performances from its highly-penetrated European markets, Vodafone was able to salvage its reputation with strong growth from its investments in developing markets such as Turkey and India. However, the company's chairman, Sir John Bond, stated this week that breaking into these fast-growing countries--naming Russia and Brazil as potential targets, was proving to be increasingly difficult. "There is nothing for sale, and it would be a big challenge for us to agree to a price that would be beneficial to the shareholders. We find price expectations in these markets are quite high."

However, Vodafone's new CEO, Vittorio Colao, clearly wanted to follow his predecessor, Arun Sarin, by focusing on emerging markets with the hope that a deal could be struck shortly to acquire a majority holding in South Africa's Vodacom. The likelihood of this coming to fruition has moved closer over the last few days with the announcement from Vodacom that it has signed an agreement to bring on board a number of black investment groups as part of the country's move to increase black economic empowerment. Vodafone would have to have added black investors to its deal and Vodacom's move means any deal should progress more smoothly, with the new investors retaining their shareholdings.

Speaking about the financial difficulties consumers are facing, Colao said that these economic challenges will need to be understood and new initiatives launched. "I don't think these issues will slow us down, but times change and we need to do things slightly differently. If families feel constrained we are going to give more SIM-only deals, lower prices, maybe less fancy handsets and maybe the handset renewal times will be pushed a little bit further."

For more on this story:
- go to the Financial Times and Guardian

Related stories:
Orange looks to expand into emerging markets. Orange story
Spain disappoints, but emerging markets boost Vodafone. Vodafone story

Vodafone in bidding war for South African Telkom

Paul Rasmussen — Thu, 10 Jul 2008 14:02:05 -0400

Until yesterday, all seemed to be going according to plan with regard to how the remaining shares of Telkom, the South African state-owned fixed and mobile operator, would be privatised. The plan was for Vodafone to acquire control of Vodacom, Telkom's mobile arm in which Vodafone all ready has a significant shareholding, while Mvelaphanda Holdings would purchase Telkom's fixed line element. But this comfortable arrangement has been shot to pieces by the news that both companies have made bids for the whole group, with the ultimate aim of owning Telkom's Vodacom stake.

Analysts believe that the two bids, which are unsolicited, are structured in a similar manner. There is also speculation that a third party, in the shape of local businessman, Barend Hendricks--with the backing of ANC leaders, might make an offer to buy a smaller portion of Telkom. Vodafone will not want to enter a protracted and costly bidding war--the on-going saga surrounding the bids for MTN is a leading example, having made what appears to be a successful acquisition of Ghana Telecom and currently negotiating to purchase a stake in Nigeria Telecom.

For more on this story:
- go to Moneyweb

Related stories
Vodafone stalks Tiscali and Vodacom. Vodafone bid story
Africa's Telkom Attracts Group of Buyers. Telkom interest story