Vodacom Group (Vodacom) has announced that its purchase of a 55% stake in Vodafone Egypt from Vodafone Group has met all the outstanding regulatory and procedural requirements hurdles, making this transformational deal unconditional and officially completed. Vodacom expects to consolidate Vodafone Egypt into its financial statements over the remainder of the financial year.
In November last year, Vodacom announced an agreement to acquire 55% of Vodafone Egypt for an equity consideration of circa R48.1 billion ($2.738 billion), which has now been successfully settled through the issuance of 241,976,243 new Vodacom Group shares and a cash consideration of circa R10.8 billion. As a result, Vodafone’s shareholding in Vodacom increases from 60.5% to 65.1%.
Commenting on the development, Shameel Joosub, Vodacom Group CEO, said: “This is an important milestone for Vodacom Group as it will cement our position as a leading pan-African Technology company in addition to diversifying and accelerating our growth profile. We are ideally positioned to partner with Vodafone Egypt to unlock the massive addressable market opportunity in Egypt, supporting and accelerating financial and digital inclusion.”
The acquisition of Vodafone Egypt, one of Africa’s premier telecom operators, is a unique opportunity to advance Vodacom’s strategic connectivity and financial services ambitions. Vodafone Egypt is a clear market leader, strategically positioned to capture growth in a fast-growing Information and Communications Technology (ICT) market. Vodafone Egypt recently delivered strong interim results with local currency service revenue growth of 18.6%.
“In addition to being an attractive asset on a standalone basis, we will seek to leverage our financial services product roadmap, including our super-app approach, to accelerate Vodafone Egypt’s financial services opportunity. We also see upside from cross pollination between Vodafone Egypt’s software factory and our big data capabilities and closer cooperation between both companies by scaling pan-African enterprise and IoT solutions,” concludes Joosub.
Vodacom will provide an update on its medium-term growth outlook with its next quarterly trading update, which will be published on 31 January 2023.
Vodafone Egypt is the largest mobile network operator in Egypt with 43% revenue market share, offering a range of integrated telecoms services including voice, data and mobile money services to 43 million consumer and enterprise customers. 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 telecom regulatory authority, Vodafone Cash had almost 90% of mobile wallet transactions as at August 2021.
With the completion of the acquisition, Vodacom Group will simplify its dividend policy to at least 75% of headline earnings. The current policy is to pay at least 90% of adjusted headline earnings, excluding the contribution of Safaricom, and additionally pass-through Safaricom dividends received. Notwithstanding the change in dividend policy, Vodacom Group will still have one of the highest dividend pay-out policies on the JSE.