Abu Dhabi group may buy 60% stake in Vodacom, insiders say

The Abu Dhabi carrier is studying the feasibility of an offer for part or all of the UK group Vodafone’s stake in JSE-listed Vodacom, the people said, asking not to be identified because the information is private. 

Vodafone owns roughly 60% of the company. Shares of Vodacom jumped more than 7% earlier on Wednesday, its  biggest daily gain since March 2020, giving it a market value of about R243 billion. It ended the day around 5% higher. Vodafone shares pared earlier losses and were down 0.1% in London. 

Etisalat is also weighing the possibility of combining some of its own African operations with Vodacom or buying Vodacom assets in specific countries, the people said. It’s in the early stages of weighing which path to pursue, and could also consider other forms of cooperation, according to the people.

Any tie-up would bring together the biggest Middle Eastern telecom operator with the second-biggest African carrier by market value. Vodafone has been steadily consolidating its interests on the continent under Vodacom, which provides telecom services in countries including South Africa, Tanzania and the Democratic Republic of Congo. 

Etisalat became Vodafone’s largest shareholder earlier this year and is keen to leverage this position as it plots an expansion of its own business in Africa, according to the people. 

Deliberations are ongoing and there’s no certainty they’ll lead to any transactions. A spokesperson for Etisalat said the group is scanning the market for opportunities in line with its strategy to grow in part through acquisitions, though there is “no such project in progress at the moment.” 

Representatives for Vodafone and Vodacom declined to comment. 

Etisalat disclosed in May that it had spent $4.4 billion for a 9.8% stake in Vodafone. It announced Wednesday it had it increased its holding to 11%. The Middle Eastern company is the controlling shareholder of North African carrier Maroc Telecom, which has a market value of about $9.5 billion in Casablanca. 

Telecom companies in the Middle East have been stepping up dealmaking this year. Etisalat has been working to boost its shareholding in Saudi Arabia’s Mobily, while Qatar’s Ooredoo QPSC is working on a sale of its network towers and is also considering carving out its data centre unit.

"Etisalat’s possible acquisition of Vodafone’s 60% stake in African carrier Vodacom may face many obstacles as the governments of Morocco, South Africa and Kenya — as well as regulatory and competition authorities — would need to sign off. An agreement could yield considerable synergies for Etisalat, with emerging-market telecom and mobile-money expertise adding value to its operations outside the UAE," says John Davies, Bloomberg Intelligence telecoms analyst