Regulatory permission was given to Vodacom Group today for its $2.3B (R41 billion) acquisition of a 55% controlling stake in Vodafone Egypt. In an interview, CEO of the Vodacom Group Shameel Joosub disclosed the development.
According to Joosub, the acquisition of a controlling stake in Vodafone Egypt, the market leader in Egypt’s telecoms industry, will increase Vodacom’s potential for growth and profit. Additionally, he pointed out that Vodafone Egypt should significantly diversify the group’s regional potential.
“I have an exciting update to share on our controlling 55% stake in Vodafone Egypt. We have just been informed that Egypt’s Financial Regulatory Authority has approved the transaction. This marks a key milestone in completing the transaction and follows the approval of Egypt’s National Telecom Regulatory Authority. With these approvals, we are confident we can complete the transaction in the near-term.”
The Midrand-headquartered telco first announced the deal in November last year, saying it had agreed terms with Vodafone on the transaction, and would fund the acquisition by issuing 242 million new ordinary shares at R135.75 per share and R8.2 billion in cash.
Vodafone Egypt has 43 million business and consumer customers and a 43% revenue market share. Through Vodafone Cash, the operator is the main provider of mobile wallets in Egypt. As of August 2021, Vodafone Cash accounted for approximately 90% of mobile wallet transactions, according to the national telecoms regulatory authority.
Vodacom Group serves as a mobile operator in a few countries, including Tanzania, South Africa, Lesotho, and the Democratic Republic of the Congo (DRC). Through its ownership of shares in Safaricom and its participation in the Safaricom-led consortium in Ethiopia, it has a presence in Kenya and Ethiopia.
In addition to its mobile operator licenses, Vodacom operates roughly ten other businesses across Africa, notably in nations like Nigeria.
“As a majority shareholder in Egypt, one of the big markets in Africa, Vodacom will benefit from that […],” Pater says. “In the greater scheme of things, it [Nigeria] is a small market, but it can grow because the business environment across Africa is going to start maturing to greater use of information and communications technology (ICT).”
The increased demand for ICT business solutions is “partially expedited by the Covid-19 scenario. Like everywhere else, companies are increasingly taking up cloud services and also relying a lot more on IT to drive efficiencies”, said Pater.
“Egypt, from that perspective, has potential as a big business market for Vodacom. Obviously, [when Vodacom becomes] … a majority shareholder, it [Vodafone Egypt] will account for more than half of the revenue. It will certainly be very positive for Vodacom’s income statement,” Pater concluded.