Vodacom is close to inking a deal to sell its under-performing Gateway unit, after the entity returned an operating loss for the year to March.
CEO Pieter Uys says the deal, which he had hoped to ink on Friday, should be wrapped up within the next week “or so”. He explains that it does not make sense to be in the carrier business unless the company has economies of scale.
Vodacom bought Gateway in 2008, for $700 million, or currently around R5.8 billion. A year ago, it was worth $72 million after Vodacom wrote it down substantially.
Gateway has customers in 40 countries in Africa, providing communications services to multinational companies and telecommunications network operators.
Uys says selling Gateway will add back about 1.5% to the operator's earnings before interest, tax, depreciation and amortisation (Ebitda) margin. Vodacom reported an Ebitda margin of 34%, an improvement on last year's 33.7%.
However, the Gateway unit dragged down margins at the operator's international business, where the gains by the operators were partially offset by Ebitda losses in Gateway.
A year ago, Vodacom wrote down its Nigerian Gateway operation by R1.5 billion, after the unit underperformed, having already impaired it by R3.2 billion in the 2010 financial year.
Uys will not disclose the buyer or the selling price at the moment.
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