Vodafone pays $900m for stake in Ghana firm

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The Independent Online

Vodafone has bought a 70 per cent stake in Ghana Telecom for $900m (£454m), in line with the company's strategy to look to emerging economies for expansion opportunities.

The deal is Vodafone's second major move in Africa in the last month. It values the Ghanaian group at $1.3bn, and is expected to be agreed with the country's government, which will retain a 30 per cent stake, in the autumn.

With domestic mobile markets increasingly saturated, Ghana is an attractive prospect for Vodafone. Mobile penetration is still relatively low and, out of a population of 24 million, more than 50 per cent are under the age of 25. The economic background is also promising: Ghana saw real GDP growth of 6.3 per cent last year, and recent oilfield discoveries could boost development further.

Ghana Telecom is the country's third largest mobile operator, with 1.4 million customers. It is also the leading fixed line provider, with 99 per cent of all lines and 90 per cent of the retail broadband market.

Over the next five years, Vodafone expects Ghana Telecom to make infrastructure investments of more than $500m to maintain and expand its network, and aims for mobile market share to increase from 17 per cent to 25 per cent.

As part of the deal, the government's network assets will be transferred to the company, which saw revenues of $290m and earnings before tax of $42m in the last financial year.

Arun Sarin, chief executive of Vodafone, said: "Ghana is one of the most attractive markets in Africa, with mobile subscribers growing at more than 55 per cent a year and mobile penetration around 35 per cent. I expect that our investment will generate substantial benefits for Vodafone and for the Ghanaian economy, and we are delighted that we will be working in partnership with the government of Ghana."

Mike Grant, a partner at Analysys Mason, said: "The Ghana deal plays back to Vodafone's recognition of the opportunity that emerging markets represent, and the focus on capitalising on those opportunities. Ghana Telecom has a relatively small customer base, and Vodafone is paying quite a large sum, but it is in a part of the African subcontinent that is more stable and has a better economic condition than many other counties in that area, so Vodafone is comfortable in paying a modest premium for the controlling stake."

Last month, Vodafone initiated talks over plans to take a controlling interest in Vodacom, the South African mobile operator, with Telkom, its co-owner. The UK group wants to add 12.5 per cent to its 50 per cent holding.

Vodafone has 37 million customers across eight countries in Africa.

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