By The EastAfrican

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South Africa’s Vodacom Group has agreed to buy a 55 percent controlling stake in Vodafone Egypt for $2.73 billion as part of the telco’s pan-African expansion bid.

The shares are currently held by UK’s Vodafone Group Plc.

This comes barely six months after Vodacom, through the Global Partnership for Ethiopia — a consortium led by Kenya’s Safaricom — acquired a licence to start operations in the horn of Africa next year

Vodacom Group will fund its acquisition in Vodafone Egypt by issuing 242 million new ordinary shares priced at 135.75 South African Rands ($8.88) per share and $548 million in cash. This values the proposed transaction at about $2.73 billion.

“Acquiring a majority stake in Vodafone Egypt would cement Vodacom Group’s position as Africa’s leading techco by advancing our strategic connectivity and financial services ambitions while increasing our total population coverage on the continent to over half a billion people and more than 40 percent of Africa’s gross domestic Product (GDP),” Vodacom’s Chief Executive Shameel Joosub said in a statement.

Vodacom, which also acquired 35 percent stake in Kenya’s Safaricom from Vodafone Group in 2017, currently has operations in South Africa, Tanzania, Lesotho, Democratic Republic of Congo and Mozambique.

UK’s Vodafone Group Plc owns 60.5 percent shareholding in Vodacom as at March 2021.

“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,” said Mr Joosub.

Vodafone Egypt is the largest mobile network operator in Egypt with 43 percent revenue market share, offering a range of integrated telecommunications services including voice, data and mobile money services to 43 million consumer and enterprise customers.

“In 2017 we bought a strategic stake in Safaricom from Vodafone that has proven to be value accretive. We said at the time that we had negotiated an attractive price for Safaricom and we believe this to be the case with Vodafone Egypt,” said Joosub

“As this is a related-party transaction, we have implemented appropriate governance controls to ensure the transaction was and is negotiated, evaluated and executed on an arm’s length basis.”

In March 2020, Vodacom and Safaricom acquired the MPesa brand, product development and support services from Vodafone Group through a newly created joint venture, MPesa Africa

MPesa Africa coordinates and implements our MPesa strategy, driving product expansion and leveraging best practice across the portfolio.

It is a significant milestone for Vodacom as it will accelerate our financial services aspirations in Africa.