By Alexandra Wexler

 

CAPE TOWN, South Africa--Vodacom Group Ltd., South Africa's largest mobile operator by subscribers, said Wednesday that it is buying a 41 billion South African rand ($2.74 billion) stake in Vodafone Egypt Telecommunications SAE, the telecom's first expansion into North Africa.

Johannesburg-based Vodacom said it has agreed to acquire a 55% stake in Vodafone Egypt by issuing 242 million new ordinary shares at ZAR135.75 per share and ZAR8.2 billion in cash, subject to regulatory and shareholder approvals.

Vodacom is majority-owned by Vodafone Group PLC, the largest mobile and fixed network operator in Europe. As a result of the deal, Vodafone's ownership in Vodacom will increase to 65.1% from 60.5%. Vodafone also currently holds a majority 55% stake in Vodafone Egypt.

Shameel Joosub, Vodacom's chief executive, said he expects the deal to accelerate Vodacom's medium-term operating profit growth into double digits. He said the transaction gives the company exposure to a young, growing and largely unbanked population.

"We see a highly attractive opportunity there... to expand financial services, especially VodaPay and M-Pesa platforms into Egypt," Mr. Joosub said of the company's mobile money offerings. "We've been close to the asset for years in terms of being part of the Vodafone group," he said.

Vodafone Egypt is the largest mobile network operator in Egypt with 43% revenue market share and 43 million customers. Vodacom had 123.7 million subscribers across its footprint, which includes Democratic Republic of Congo, Ethiopia, Kenya, Lesotho, Mozambique, South Africa and Tanzania, as of March.

Vodafone Group said the sale simplifies the management of its African holdings.

The acquisition is expected to conclude in the first quarter of 2022.

Mr. Joosub said the company's focus will now be on growing its customers in its current footprint. "This is the end of geographic expansion," he said.

Vodacom Group also said Wednesday that it had agreed to acquire a co-controlling 30% stake in South Africa's Community Investment Ventures Holdings' (CIVH) fiber assets and create a new infrastructure entity currently dubbed "InfraCo," which will house assets currently owned by CIVH subsidiaries Dark Fibre Africa and Vumatel as well as certain Vodacom-owned fiber assets.

Vodacom plans to pay for the transaction with a combination of ZAR6 billion in cash and the contribution of its fiber-to-the-home, fiber-to-the-business and business-to-business transmission access fiber network infrastructure to InfraCo at a valuation of ZAR4.2 billion, in return for new shares in InfraCo.

Vodacom expects the transaction to scale-up the reach of fiber in South Africa, particularly to smaller and poorer towns.

 

-Jaime Llinares Taboada contributed to this article.

 

Write to Alexandra Wexler at alexandra.wexler@wsj.com

 

(END) Dow Jones Newswires

November 10, 2021 03:28 ET (08:28 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.
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