Vodacom ‘completes’ Egypt deal as Etisalat ‘studies offer’ for SA group

Vodacom Group appears to have finally completed its buyout of Vodafone Egypt more than a year after the deal was first announced, amid reports that UAE’s e& — formerly Etisalat — is in turn considering buying shares in the African group to boost its international footprint.

Although official confirmation did not yet seem available, the Al‑Mal news agency reported that Vodacom has now taken over Vodafone’s 55% shareholding in Vodafone Egypt, bringing to an end a protracted transaction that required regulatory approval from Egypt’s National Telecom Regulatory Authority and Financial Regulatory Authority.

Vodacom had agreed to acquire the 55% stake for ZAR 41bn (£1.35bn/€1.57bn). Following the deal, Vodafone’s ownership in Vodacom was due to increase from 60.5% to 65.1%.

As the transaction was being finalised, Bloomberg separately reported that e& was studying the feasibility of an offer for all or part of Vodafone’s stake in Vodacom. The UAE group is already the largest shareholder in Vodafone, recently increasing its shareholding to 11% after buying a 9.8% stake in May.

Vodacom declined to comment on the e& reports. According to Bloomberg, e& is keen to “leverage” its position as the biggest Vodafone shareholder and is also considering merging some of its African operations with Vodacom, or buying Vodacom assets in specific countries.

Notably, e& Group CEO and Egyptian national Hatem Dowidar has also previously held roles at Vodacom, Vodafone Group, and Vodafone Egypt.

A good fit?

e&, with operations in 16 countries across Middle East, Asia, and Africa, has reportedly been looking to expand into new markets. In Africa, it is active in Benin, Burkina Faso, Central African Republic, Chad, Egypt, Ivory Coast, Gabon, Mauritania, Morocco, Niger, and Togo, with the majority of units operating under the Moov brand.

A combination with Vodacom would certainly make sense if the group is looking to add new African markets to its footprint. In addition to its newly acquired Egyptian business, Vodacom operates network-based businesses in seven markets in Africa: the Democratic Republic of the Congo, Ethiopia, Kenya, Lesotho, Mozambique, South Africa, and Tanzania.

However, Bloomberg Intelligence noted that e& could face significant regulatory obstacles since approval would be required from the governments of Kenya, Morocco, and South Africa, as well as regulatory and competition authorities. The Egyptian crossover with Vodacom will also need sidestepping somehow.

As for Vodafone, the UK‑based group has been steadily consolidating its African interests under Vodacom as part of the long‑running restructuring programme that has seen it divest and deconsolidate much of its asset portfolio outside of Europe (Vodafonewatch, passim).

A report by Al‑Mal on Sunday suggested that Vodafone is discussing ways to reduce its stake in Vodacom because its increased ownership following the Egypt transaction means that Vodacom’s free float on the Johannesburg Stock Exchange (JSE) will be below the stipulated 20%.

In November 2021, Vodafone nevertheless noted that the JSE had not asked for any remedial steps to be taken and confirmed it had no “current intention to dispose of any of its shares in the market to increase Vodacom’s free float”.

Kicking Qatari deal into 2023

Meanwhile, adding to the mix within Vodafone’s evolving African footprint have been separate reports suggesting that the Qatar Investment Authority (QIA) is set to complete its acquisition of a minority stake in Vodafone Egypt from national telco Telecom Egypt, Vodafone’s co‑parent, in the first quarter of 2023.

It was reported in October that QIA, the emirate’s sovereign wealth fund, was in talks to buy 20% of the operator by the end of 2022. However, the transaction is said to have been postponed because of the World Cup in Qatar and the Christmas holidays.

Daily News Egypt also said QIA is set to buy a 25% stake, as opposed to 20%, valued at between $1bn and $1.25bn.