Vodafone Planning to Scrap Vodacom Restrictions

Vodafone is reported to be preparing to scrap its long term shareholders agreement with its South African partner which has prevented the local operator, Vodacom from expanding out of Southern Africa. Vodafone is a joint owner of Vodacom with the local landline incumbent, Telkom.

When Vodafone invested in Vodacom, an agreement was signed between the shareholders which would prevent Vodacom expanding of the Southern Africa region, as Vodafone had its own plans for expansion into Africa. In the end, these expansion plans did not occur, and Vodacom has been held back by the shareholders pact, watching as rival MTN snapped up operations around the continent. An agreement permitting Vodacom to expand into Nigeria was a one-off special.

South Africa's Business Day newspaper reports that Telkom and Vodafone are meeting this week and that an agreement in principle exists.

"We are meeting with Vodafone this week to discuss how to amend that shareholders' agreement. They have agreed already," Nomazizi Mtshotshisa, chairwoman of Telkom said at Telkom's annual general meeting last Friday. She said it had "been agreed with Vodafone that we will amend the shareholders' contract so as to not impede Vodacom's growth".

"We have a draft and they have a draft," she said, confirming that Vodafone had already given an "in- principle" agreement to the changes.

There had been recent rumours that Vodafone was considering an all out bid for Telkom so as to gain full control of Vodacom, although Mtshotshisa said that was not the case. Vodafone recently increased its 35% stake in Vodacom to a parity 50% with Telkom."

Posted to the site on 24th October 2006