Vodafone Makes Renewed Bid to Buy South Africa's Vodacom

Vodafone has approached South Africa's dominant landline operator, Telkom with a formal offer to buy its stake in their joint venture mobile operator, Vodacom. The move came as a consortium of investors also made a bid to buy the company's landline operations - subject to selling off the Vodacom stake.

"The letter makes it clear that the offer will only be made if a number of pre-conditions are met including, inter alia, confirmation by the Telkom Board that it will unbundle Telkom's entire 50 percent stake in Vodacom as part of the offer," Telkom said in a statement to the Johannesburg stock exchange.

The company confirmed that it has restarted the on/off talks with Vodafone over its stake in Vodacom on May 14th and that the talks were unconnected with the bid for its landline operations. Last year the company pulled out of talks to split itself in half and sell its landline assets to MTN with Vodafone taking the mobile side of the business. MTN itself is in various merger or takeover talks with India's Reliance Communications at the moment.

The consortium is lead by the Mvelaphanda Group, US based private equity firm, Och-Ziff and other strategic investors. The Mvelaphanda Group is headed by former presidential hopeful Tokyo Sexwale.

If Vodafone takes the Vodacom stake, it would still need to set aside a portion of the company for the black economic empowerment (BEE) transaction which was recently finalised and keep the company listed on the local stock exchange.

Currently, the South African government owns 38.9% of Telkom, the Public Investment Corporation (PIC) owns 15.3%, and the politically connected Elephant Consortium owns 5.7%.

Earlier this year, Dubai-based Oger Telecom also started talks about a possible buyout of the company - but the talks broke down last month.

Posted to the site on 2nd June 2008