Investors circle to buy stake in Vodacom, which plans to launch financial services in Egypt
Vodacom Group appears to have acquired Vodafone Group’s 55% share in Vodafone Egypt, more than a year after the move was first mooted. The other 45% is owned by Telecom Egypt, which itself is 80% state-owned.
Vodafone Egypt is the biggest operators in the country, with 44 million customers and 40% market share.
The transfer of shares was agreed by Vodafone’s shareholders in January this year and at that time, it was thought the transaction would be completed by the end of March. Once the deal was closed, Vodafone expected to increase its shareholding in Vodacom from 60.5% to 65.1%.
Egypt’s regulators had other ideas and there is still no official confirmation from the regulators involved – the Financial Regulatory Authority and the National Telecommunications Regulatory Authority – that the transaction has taken place. Vodacom Group’s CEO, Shameel Joosub, was quoted saying that the acquisition had got the green light from regulators in November.
New investors
The Qatar Investment Authority (QIA) is one of three Arab sovereign funds reportedly in negotiations with Telecom Egypt to buy a stake in Vodafone Egypt. Some sources had suggested could be completed before the end of the year.
However, e& became Vodafone plc’s biggest shareholder in May, buying a 9.8% stake which it subsequently increased to 11%. The state-controlled United Arab Emirates (UAE)-based firm is known to be seeking new markets, including Africa and Europe.
According to Bloomberg, it is mulling buying some of all of Vodafone’s stake in Vodacom. Other reports suggest e& is also weighing the possibility of merging some of its African operations with Vodacom, or acquiring Vodacom’s assets in particular markets. e& has opcos in 16 countries across the Middle East, Asia and Africa, mostly operating under the Moov brand.
There could be significant regulatory hurdles in some countries.
Vodacom’s own ambitions
Vodacom has its own ambitions for the Egyptian market. It plans to launch financial services products through the Vodapay ‘super-app’ it’s developing with the Chinese Alibaba Group, modelled on Alibaba’s Alipay – the world’s largest digital wallet. Alipay offers access to financial services from online shopping, to loans, mobile payments and more.
The transaction should simplify Vodafone’s management of its African holdings while Vodacom gains access to market with great potential and has the opportunity to diversifying its portfolio and boost growth.
In turn, Vodafone Egypt should gain advantages from closer co-operation with Vodacom, such as ramping up financial services and IoT.