Vodacom is upping its interest in its Tanzanian operation by 17,2% at a cost of R2,5bn, the telecommunications group said on Tuesday.
The JSE-listed mobile operator has entered into an agreement with Cavalry Holdings and its shareholders in terms of which it will subscribe for new shares in Cavalry, consequently diluting existing shareholders’ interest in Cavalry from 100% to 51%.
The transaction will lead to Vodacom increasing its economic interest in Vodacom Tanzania from 65% to 82,2%.
Cavalry’s existing shareholders will retain an indirect 17,8% interest in Vodacom Tanzania, which is that country’s largest mobile operator with more than 10m subscribers.
The transaction is expected to close before the end of the financial year, subject to the fulfilment of a number of conditions.
Cavalry is a private investment holding company and an indirect shareholder in Vodacom Tanzania through its interest in the latter’s existing strategic partner.
Vodacom said the deal will allow it to increase its exposure to one of its key investments in sub-Saharan Africa.
“Vodacom Tanzania has been Vodacom’s most successful investment outside of South Africa to date,” the group said. For the six months ended 30 September 2013, service revenue grew by 19,1% and the subscriber base makes the operation the largest in Vodacom’s international segment.
“Tanzania is an attractive telecoms market with mobile penetration only at 57% at the end of September. This transaction will increase Vodacom’s effective exposure to this high-growth market.”
A new shareholders’ agreement in relation to Cavalry and an updated shareholders agreement in relation to the governance of Vodacom Tanzania have been entered into and will become effective upon completion of the deal.
The amount payable by Vodacom for the subscription of new shares in Cavalry is R2,46bn, payable in cash at completion of the transaction. There is no deferred compensation.
Vodacom will fund the acquisition through available cash resources and existing debt facilities.
The deal is still subject to approval by the South African Reserve Bank and the satisfactory completion of a due diligence exercise on Cavalry and its subsidiaries on terms satisfactory to Vodacom. — (c) 2013 NewsCentral Media