Emirates Telecommunications Group is exploring a potential investment in Vodafone Plc’s African business as it looks to boost its international presence, people familiar with the matter said.
The Abu Dhabi airline is studying the feasibility of a bid for some or all of Vodafone’s stake in Johannesburg-listed Vodacom Group, said the people, who asked not to be named because the information is private.
Vodafone owns approximately 60% of the company.
Vodacom shares rose 7.1% at lunchtime to close 4.61% higher at R131.81 on Wednesday.
Etisalat is also weighing the possibility of combining some of its own African operations with Vodacom or buying Vodacom assets in specific countries, the people said. It is in the early stages of weighing which way to go, and might also consider other forms of cooperation, according to the people.
Any link would unite the largest telecoms operator in the Middle East with the second largest African operator by market value. Vodafone has been steadily consolidating its interests on the mainland under Vodacom, which provides telecommunications services in countries such as South Africa, Tanzania and the Democratic Republic of the Congo.
Etisalat became Vodafone’s largest shareholder earlier this year and wants to take advantage of this position as it plans an expansion of its own business in Africa, according to the people.
Discussions are ongoing and there is no certainty that they will lead to any transaction. An Etisalat spokesman said the group is exploring the market for opportunities in line with its strategy to grow partly through acquisitions, although “there are no such projects underway at the moment.”
Representatives for Vodafone and Vodacom declined to comment.
Etisalat revealed in May that it had spent $4.4 billion for a 9.8% stake in Vodafone. It announced on Wednesday that it had increased its stake to 11%. The Middle Eastern company is the majority shareholder of North African operator Maroc Telecom, which has a market value of around $9.5 billion in Casablanca.
Middle Eastern telecommunications companies have intensified their negotiations this year. Etisalat has been working to increase its stake in Saudi Arabia’s Mobily, while Qatar’s Ooredoo QPSC is working on the sale of its network towers and is also considering creating its data center unit.
What Bloomberg Intelligence Says:
Etisalat’s potential acquisition of Vodafone’s 60% stake in African operator Vodacom (reported by Bloomberg News) may face many hurdles, as the Moroccan, South African and Kenyan governments, as well as competition and regulatory authorities They would have to sign. A deal could generate considerable synergies for Etisalat, with emerging markets mobile money and telecoms expertise adding value to its operations outside of the United Arab Emirates.
—John Davies, BI telecommunications analyst
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