Broadcast Media Africa has learnt that Vodafone has been selling off several of its operations recently, and Vodacom has become an attractive acquisition target for many global players. On March 15, 2024, Vodafone announced that it had agreed to sell Vodafone Italy to Swisscom for US$8 billion.
This transaction followed Vodafone’s sale of its Spanish business to Zegona Communications for US$5 billion five months prior. These sales will generate US$12 billion, which Vodafone plans to use to return US$4 billion to shareholders via buybacks as part of its broader capital allocation review.
Vodafone CEO Margherita Della Valle explained that these deals were part of the company’s “portfolio right-sizing” strategy, which was announced in May 2023. She noted that Vodafone would now focus its operations in Europe on growing markets where it holds strong positions on a good local scale. Additionally, Vodafone will focus on business-to-business services, which Della Valle described as its biggest growth opportunity.
Vodafone’s selling spree began in 2019 when the company sold its stake in Vodafone Malta to Monaco Telecom and created Vantage Towers, which houses its European mobile towers. In 2022, Vodafone sold a stake in Frankfurt-listed Vantage Towers to a private equity consortium. In 2023, Vodafone sold Vodafone Ghana to Telecel Group and Vodafone Hungary to the Hungarian state.
The selling spree raised questions about whether Vodafone was also looking to offload Vodacom, which houses its most valuable African operations. Industry players speculated that Vodafone was packaging Vodacom as a leading African mobile communication company in preparation for acquisition.
After Vodafone acquired a majority stake in Vodacom and listed the company on the JSE in 2009, it made a big strategic change. From the effective date of the listing, Vodafone started using Vodacom as its exclusive investment vehicle in sub-Saharan Africa. In 2017, Vodacom acquired 87.5% of Vodafone Kenya from Vodafone International, which translated into a 34.94% indirect stake in Safaricom. In 2020, Vodafone handed over management of its Ghana unit to Vodacom, which was another step in bundling its African operations under one roof.
At the end of 2022, Vodacom purchased a 55% stake in Vodafone Egypt in a deal valued at R48.1 billion. Vodacom is also part of a global consortium behind Safaricom Ethiopia, which recently launched its mobile network. Vodafone has, therefore, moved all its African operations to Vodacom, which is now primed for acquisition.
Vodafone finds it easier to offload its African operations as a single entity, Vodacom than to sell them individually. There was immediate interest in the “new Vodacom,” Emirates Telecommunications Group (Etisalat) explored a potential investment in Vodacom in December 2022. Etisalat wanted to increase its international footprint and was assessing the feasibility of buying all or part of Vodafone’s majority stake in Vodacom.
In February 2023, Bloomberg reported that Vodafone was exploring options for its African business as investors pressured the company to boost performance. Vodafone reportedly worked with advisers to study ways to extract more value from its 65% holding in Vodacom. The considerations ranged from merging the business with other operators or divesting some assets in certain markets, including selling a stake in Vodacom.
Despite the reports that Vodafone was exploring options and Etisalat’s interest, the company maintained that Vodacom was not for sale. Vodacom CEO Shameel Joosub also said that Vodafone remains committed to Vodacom and does not want to sell the company.
