Vodafone, Vodacom deal cleared

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 12 Jan 2006

The Competition Tribunal has approved UK-based Vodafone`s planned purchase of VenFin`s 15% stake in Vodacom, paving the way for the deal to be completed by month`s end.

A Stock Exchange News Service announcement released late yesterday afternoon says VenFin shareholders voted in favour of the deal.

In terms of the arrangement, Vodafone will buy the entire VenFin holding, keep the Vodacom stake, and sell the remainder back to the Rupert Trust for R5 billion, an effective discount of R1.9 billion. The total value of the deal is estimated at R21 billion and gives unlisted Vodacom a total value of about R106 billion.

Liezel Blignaut of the Competition Commission was quoted on SABC News as saying the deal was approved as it was "simply a matter of transferring shares and ownership and did not affect the market structure in any way".

A last minute attempt by a little-known black economic empowerment (BEE) company, HBR Foundation, to have VenFin`s Vodacom shares put in BEE hands, was rejected by the Competition Tribunal as it came too late in the process.

Status quo

Analysts are wondering what the implications are for the Telkom/Vodacom relationship, once the fixed-line operator shares a 50% shareholding with Vodafone.

"I believe they will let the status quo continue," says Brian Nielsen, a director of research firm BMI-TechKnowledge.

Nielsen says he doesn`t envisage a change in the Vodacom brand in the short-term.

"Vodacom has just announced that it has 17.5 million subscribers and that brand is well entrenched in the South African market. Vodafone Live! (the 3G offering) seems to be a non-event in consumers` minds," he says.

Craig Terblanche, business and technology advisor at Marketworks, says the Vodafone purchase makes sense as the UK group recently offloaded its Swedish unit. This formed part of a strategy to find growth in markets that have not been penetrated to the extent their more mature counterparts have.

"Clearly Africa has huge potential for mobile penetration given the prevalent lack of infrastructure. I would not be surprised if Telkom and Vodafone plan to do more in Africa to exploit the opportunity at a physical infrastructure and wireless level," he says.