Vodafone's intent to buy Ghana Telecom will help shore up the UK-based cellular group from emerging market competition and allow it to expand while the Vodacom shareholding is finalised, a Frost & Sullivan analyst says.
Yesterday Vodafone announced that it would take a 70% stake in Ghana Telecoms for $900m (R720m), with that country's government retaining the minor holding.
Vodafone says it expects the transaction to be concluded in the third quarter of this year and included in the transaction price would be the transferring of the Ghanaian Government's Fibre Optic Network, although the details of this are still to be finalized.
Frost & Sullivan telecommunications analyst Lindsey MacDonald says the transaction makes sense from two angles: with the inclusion of the fibre optic network, the new entity can play in the convergence game with fixed/mobile solutions; secondly, it allows Vodafone to enter the emerging African markets, which are still seeing high growth.
"According to our figures, the Ghanaian mobile market had 4.7 million subscribers in 2006, seven million in 2007, and we estimate nine million subscribers this year. Even with nine million subscribers, 41% of the total market remains uncovered," she says.
Not moving into these emerging markets and not taking advantage of their high growth potential, would Vodafone at a disadvantage against companies that have made it their specialty to operate in such markets, says MacDonald.
"We have, for instance, seen the interest by Indian operators in companies such as MTN, and Vodacom still has to finalise its shareholding issues. There is no reason why the Ghanaian holding should not be transferred to Vodacom at a later stage," she says.
MacDonald says while there has been a lot of movement around African, Middle East and Asian mobile operators in these markets, the large Latin American players have been noticeable by their absence.
"Those Latin American companies have been very successful in their markets and I think it could only be a matter of time before they start moving into the African markets," she says.
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