Vodafone Group, from the United Kingdom, is set to offload its subsidiary Vodafone Egypt to South Africa’s Vodacom Group for R41 billion. It will be the first time Vodacom expands into Northern Africa as it seeks more growth opportunities on its home continent.
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It will acquire a 55 percent controlling stake in Vodacom Egypt, which Vodacom says “provides a unique opportunity” to accelerate its growth. It will fund this transaction by issuing 242 million new ordinary shares at R135.75/share and R8.2-billion in cash, which equates to the states R41 billion. The other 45 percent of Vodafone Egypt will still be help by the local Telecom Egypt, a fixed-line operator in the country.
“Vodafone Egypt is ideally positioned to capture growth in a burgeoning ICT market, which means the proposed acquisition provides our shareholders with an exciting revenue and profitability diversification opportunity and the potential to accelerate the group’s medium-term operating profit growth potential into double digits. We intend to provide an update on our medium-term targets at our full-year results, which will be reported in May 2022,” Vodacom Group CEO Shameel Joosub said in a statement.
He added that buying a majority stake in Vodafone Egypt will increase Vodacom’s population coverage to more than 500 million people and it will be in countries that make up more than 40% of Africa’s GDP.
“Egypt’s appeal as an investment destination is supported by its economic growth outlook, large, young and growing population and structural reform agenda. Vodafone Egypt holds a strong network leadership position and is the country’s largest mobile wallet provider through Vodafone Cash. According to the national telecoms regulatory authority, Vodafone Cash had almost 90% of mobile wallet transactions as at August 2021,” Vodacom said.
“Vodafone Egypt has a proven track record of consistently delivering strong revenue growth, evidenced by a 14% financial year 2017-2021 revenue compound annual growth rate, while its future growth potential is underpinned by a broad range of fundamental sector and company-specific drivers. In addition to a track record of revenue growth, Vodafone Egypt generates attractive margins and strong free cash flow,” it added.
