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Vodacom targets acquisitions in Africa І Uganda Telecom and Warid could be low hanging fruits..

South Africa-based mobile group Vodacom has confirmed that it is ready to expand its operational footprint across Africa, and is on the hunt for small-scale acquisitions. Vodacom, which is majority owned by the UK’s Vodafone Group, currently operates in five countries in sub-Saharan Africa, and chief executive Pieter Uys told Dow Jones Newswires that the company is looking to make a series of acquisitions in the USD100 million range. Uys noted that Vodacom will focus on countries that offer a stable political environment, have densely populated cities and offer room for growth.

As such, the CEO pinpointed Angola, Ethiopia and Uganda as likely targets. Announcing its FY11 results earlier this week, Vodacom noted that the financial year ended March was the first time that its operations outside South Africa have contributed positive cash flow. As a result, Uys told Dow Jones: ‘We feel more comfortable that we have the recipe to be successful outside South Africa’.

As previously reported by TeleGeography’s CommsUpdate, in March 2012 Sifiso Dabengwa, CEO of Vodacom’s chief rival MTN Group confirmed that his company was interested in lining up so-called ‘bolt-on’ deals in new African markets, once again naming Angola and Ethiopia.

In the former, a third mobile licence has been expected for some time, with state-run incumbent Angola Telecom keen to secure an international partner to assist with its entrance to the sector.

Meanwhile, Ethiopia is one of the few countries in Africa still operating a monopoly in the wireless sector, with state-run Ethio Telecom the sole licensee. Elsewhere, Uganda is overcrowded by comparison, boasting six active wireless operators, with another, Sure Telecom Uganda, waiting in the wings. Of the country’s cellcos, Uganda Telecom Ltd and Warid Telecom Uganda are plausible targets, with the ownership of both companies coming under scrutiny in recent years.

In other news, the CEO reiterated Vodacom’s commitment to fighting the long-running court case concerning a so-called ‘success fee’ that it owes to former consultant Moto Mabanga. In March Vodacom was ordered by a Kinshasa court to pay Mabanga USD21 million after losing a court appeal dating back to 2008.

Mabanga, who was hired by the company to assist in negotiations with co-owner Congolese Wireless Networks between 2007 and 2008, was paid USD2.8 million for the work, but sued the company for a further USD40.8 million that he believes he is owed. Congolese courts recently ruled that if Vodacom does not settle the payment, the courts will conduct a public auction of its shares in Vodacom Congo on 3 June. Uys told Reuters: ‘The bottom line is that we will not let that asset go, we will not get to a situation on 3 June where the asset is just sold.’

23 May 2012

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