Vodacom’s problem-parent, Vodafone

On Tuesday (17 April), Vodafone announced that it will cut 500 jobs in Germany amid increased competition.

According to Reuters, Vodafone plans to shift some operations to Romania and India and also “considerably reduce” starting salaries.

Last year Vodafone split its European unit into two separate units, north and south, with countries in the latter territory namely Greece, Italy, Spain and Portugal continuing to come under pressure.

Vodacom’s parent company was also linked to a deal that would see its assets split up in a joint purchase by US firms Verizon Communications and AT&T, earlier this month.

The Financial Times reported that Verizon could get Vodafone’s stake in Verizon Wireless, while AT&T would take over the rest of Vodafone, citing “usually reliable people” as the source of the information.

With rumours about a merger deal abounding, Verizon said it was still interested in buying out Vodafone’s stake in Verizon Wireless, a joint venture between the two companies.

“It does not, however, currently have any intention to merge with or make an offer for Vodafone, whether alone or in conjunction with others,” Verizon said.

Verizon Communications is expected to publish its results on Thursday (18 April) and should shed some light on any potential deal, which analysts value at $245 billion.

Vodacom impact

While Vodafone owns 65% of South Africa’s local operator, growth consulting firm Frost & Sullivan believes that a potential buyout of Vodafone would have very little impact on its local subsidiary.

Naila Govan-Vassen, information & communications research analyst at Frost & Sullivan said that a key part of the acquisition will be AT&T acquiring the rest of the Vodafone Group.

“AT&T is known to be the leader in product and service innovation within the telecommunication industry. In terms of market presence, AT&T will gain from a strong footprint in the mobile sector (SA, Mozambique, DRC, Lesotho and Tanzania) as well as the enterprise service market in Africa.”

“In addition, Vodacom owns an expensive telecommunication infrastructure in Africa. As a result, AT&T could leverage off their infrastructure and provide better services to their corporate clients established in Southern Africa,” the analyst said.

Govan-Vassen noted that Vodacom is the market leader in the countries where it operates (with the exception of Mozambique), “thus with the acquisition of Vodafone Group by AT&T, Vodacom will leverage off AT&T’s expertise in fixed line services and converged services, but its operational activities are expected to remain unchanged”.

F&S noted that AT&T attempted to take over T-Mobile US in 2012 and, while Vodafone was likely in discussion, a deal was unlikely to take place in 2013.

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Vodacom’s problem-parent, Vodafone