Vodacom Group to buy more local shares

South Africa's Vodacom Group has said it will acquire an additional 17 per cent stake from Tanzania unit, in a move to expand holding structure but in contravetion of Tanzania Communication Regulation Authority (TCRA) regulations.

The Group said that it will pay 2.5 billion rand (250 million US dollars or 400bn/-) in cash to change the holding structure in Vodacom Tanzania to 82.2 per cent from 65 per cent.

Vodacom Group said that the minority shareholder who owned the share indirect through Cavalry, a private investment company and an indirect shareholder of the business.

"The transaction is subject to approval by the South African Reserve Bank," Vodacom Group said in a statement published by some South African media houses. On the other hand, the TCRA Communication Manager, Mr Innocent Mungy, told 'Daily News' that they have yet to receive the transaction agreements.

"As far as we are (TCRA) concern the deal is still at talking point, we cannot interfere," Mr Mungy said yesterday "but once concluded will be subjected to the regulatory approval." 

"After (the deal) is concluded, Vodacom Tanzania will issue a new shareholding structure showing who is owning what-then we'll see if it is in line with the local/foreign shareholding structure ratio."

Should the deal go through, it will contravene the mobile service provider regulation that stipulated that the shareholding structure cap between local and foreign investors is 25:75. 

The new 400bn/- share buying deal if sails through will change the current ration from 35:65 to 17.8:82.2m, which is against the stipulated ratio.

The regulator's spokesperson said he could not comment on the action to be taken until Vodacom Tanzania makes available a new shareholding structure to TRCA. Vodacom Group said on Tuesday it would indirectly raise its stake in Vodacom Tanzania to 82.2 per cent from 65 per cent by buying new shares in the company's minority shareholder through cash and existing debt facilities.

The Group said Tanzania had been its most successful sub-Saharan investment. It is the top mobile operator in the east African nation, with 10 million customers and its service revenue jumped to 19 per cent in the six months through September this year. 

The company also has presence in Mozambique, Lesotho, Nigeria and the Democratic Republic of Congo (DRC).
Source: Daily News, reported by Abduel Elinaza from Dar es Salaam, Tanzania
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