Amy Thomson and Chris Spillane
VODAFONE’S scattered ownership of African operations sets the continent apart from its other assets around the world. A chance to take greater control over Vodacom Group may start to change that.
The South African government was considering the sale of its minority holding in Vodacom, Vodafone’s biggest African asset, people with knowledge of the matter said on Wednesday. Vodafone was a possible buyer, one of the people said.
The business also covers Democratic Republic of Congo, Mozambique and Tanzania.
“It would suit Vodafone to own more of the business, consolidate the assets and drive growth in Africa through a wholly owned subsidiary,” said Bruce Main, a fund manager at Ivy Asset Management. Vodafone might have realised that its “disjointed” ownership structure in Africa gave competitors an advantage, he said.
Vodafone’s Africa operations are divided into Vodacom, in which the UK company holds about 65 percent, Nairobi-based Safaricom, of which it owns 40 percent, and Vodafone-branded businesses in Egypt and Ghana.
The South African government’s 13.9 percent stake in Vodacom is valued at about R25.5 billion. That puts a R63bn price tag on the 35 percent that Vodafone does not own.
The state was exploring a sale of the unit as it sought funds to rescue utility Eskom Holdings, the people with knowledge of the matter said.
Vodafone spokesman Ben Padovan declined to comment, as did Vodacom spokesman Richard Boorman.
Vodafone chief executive Vittorio Colao has unwound the company from holdings in France, Japan, Poland and China and worked on exiting companies Vodafone does not control. The push culminated in the $130bn (R1.4 trillion) sale of its 45 percent stake in US cellphone company Verizon Wireless, which was completed this year.
Africa is different. Vodafone’s businesses here are often co-owned by local governments. The Kenyan government owns 35 percent of Safaricom. Telecom Egypt, the state-controlled phone company, owns about 45 percent of Vodafone Egypt.
African businesses are increasingly important sources of revenue for Vodafone, which has been suffering from sales declines and heavy competition in European markets.
Vodacom customers spent more time on the phone last year than Vodafone’s biggest market by sales, German. Vodacom’s revenue of £4.7bn (R82.8bn) in the year to March made it Vodafone’s most valuable business by sales after Germany and the UK.
Vodacom shares advanced 1.24 percent to close at R124.50 yesterday, off the day’s low of R121.83. – Bloomberg