Vodacom in R2.5 billion Tanzania deal

Vodacom has entered into an agreement with Cavalry Holdings to acquire an additional indirect 17.2% interest in Vodacom Tanzania, in a deal worth R2.5 billion.

The deal will see the subscription for new shares in Cavalry, and consequently dilute the private investment holding company’s existing shareholders’ interest in the group from 100% to 51%.

Vodacom would increase its total economic interest in Vodacom Tanzania to 82.2%, from 65% before.

Cavalry’s existing shareholders will retain an indirect 17.8% interest in Vodacom Tanzania.

Vodacom Tanzania is the number one mobile operator in Tanzania that offers voice, data and mobile money services with 10.023 million mobile customers as of 30 September 2013.

By way of rationale for the acquisition, Vodacom said it would be able to increase its exposure to one of Vodacom’s key investments in sub-Saharan Africa.

“Vodacom Tanzania has been Vodacom’s most successful investment outside of South Africa to date,” it said.

For the six months ended September 2013, service revenue grew 19.1% and the mobile customer base of 10 million represents the largest operation in Vodacom’s international segment.

“Tanzania is an attractive telecoms market with mobile penetration only at 57% as at
30 September 2013. This transaction will increase Vodacom’s effective exposure to this
high growth market,” the operator said.

The consideration payable for the subscription of new shares in Cavalry is R2.46 billion, payable in cash at completion.

Vodacom said it will fund the acquisition through available cash resources and existing debt facilities.

The transaction is expected to close before the end of the financial year, subject to the fulfilment of a number of conditions precedent.

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Vodacom in R2.5 billion Tanzania deal