Vodafone share price: Group gets chance to take greater control of Vodacom

on Oct 16, 2014
Updated: Oct 21, 2019

iNVEZZ.com, Thursday, October 16: Vodafone Plc (LON:VOD) has been presented with an opportunity to gain greater control over Vodacom Group Ltd, as the South African government is considering selling its £1.5 billion stake in the company to raise funds for state power utility Eskom.

As of 14:13 BST, Vodafone’s share price had dropped 3.68 percent to 179.45p.
**SA to sell stake in Vodacom**
Bloomberg today quoted sources close to the matter as saying that South Africa’s government was exploring a sale of its 26 billion rand (£1.5 billion) stake in mobile-phone company Vodacom Group Ltd and Newbury-based Vodafone, was a potential buyer.

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Vodacom is the wireless carrier with the most subscribers in South Africa. The business also extends into the Democratic Republic of Congo, Mozambique and Tanzania.
Bruce Main, a fund manager at Ivy Asset management in Johannesburg, was cited by the news agency as commenting: “It would suit Vodafone to own more of the business, consolidate the assets and drive growth in Africa through a wholly owned subsidiary.” He added that the company might have become aware that its “disjointed” ownership structure in Africa had placed it in a disadvantageous position compared to its rivals.

**Vodafone’s business in Africa**
Vodafone’s operations on the continent are divided into Vodacom, of which the UK company owns around 65 percent, Nairobi-based Safaricom Ltd, where it holds 40 percent, and Vodafone-branded businesses in Egypt and Ghana. The group shares ownership of its businesses with local governments; in Kenya the government has a 35 percent holding in Safaricom, and in Egypt, the state-controlled phone company holds about 45 percent of Vodafone Egypt.

The South African government’s 13.9 percent stake in Vodacom, which is valued at about 25.5 billion rand, is likely to be sold to institutional investors rather than to a private buyer, according to one of the sources, quoted by Bloomberg.
Vodafone’s African unit represents an important source of revenue for the mobile phone operator, as in Europe the company’s sales have been decreasing. Vodacom reported revenue for the year to 31 March of £4.7 billion, which turned the unit into the group’s third-most valuable business by sales after Germany and the UK.

Earlier this year, Vodafone consolidated its business in India, after the Indian government gave the company the green light to raise its stake in Vodafone India, the country’s second biggest telecoms operator, from its existing 64.38 percent holding to 100 percent. The deal was seen as part of the group’s plan to take full control of the business, which it first revealed in October 2013 following a change in rules allowing foreign companies to own up to 100 percent of Indian telecommunication carriers. ()
**Fastweb update**
Today’s news came after yesterday Aldo Bisio, head of Vodafone in Italy, said that the group was not considering buying Swisscom’s broadband business Fastweb, which the Swiss telecoms giant was thought to have put up for sale. ()
**As of 14:13 BST, buy Vodafone shares at 179.45p.**
**As of 14:13 BST, sell Vodafone shares at 179.40p.**


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