Vodacom Plans Purchases In Three Countries by End of 2014

Vodacom Group Ltd. (VOD), South Africa’s largest wireless operator, plans to begin operating in three additional countries by the end of 2014 as it seeks to bring data services and smartphones to new markets.

The company will look to enter the countries by acquiring local operators, Chief Executive Officer Shameel Joosub said in an interview after a full-year earnings presentation. He declined to identify the target nations.

“We’ve cracked the African model,” Joosub said at the company’s Johannesburg headquarters. “Our formula is working. We’re a lot more confident today in terms of accessing new markets and pursuing those opportunities.”

Vodacom is expanding its data services in Africa to take advantage of increasing demand for smartphones. The company has operations in the Democratic Republic of Congo, Tanzania, Mozambique and Lesotho as well as South Africa. Revenue grew 11 percent in international markets in the year through March, compared with 2.9 percent in South Africa, the company said today.

The company is looking at acquisitions in African countries with a population of more than 10 million and with high gross domestic product growth, low mobile phone penetration and a stable political situation, Joosub said.

Two or three deals “in the next two years would be great,” he said in the interview. “There are some good opportunities out there and we are actively pursuing it. We hope to be able to add some acquisitions this year.”

Ethiopia Interest

Telma Group, the biggest telephone company in the island nation of Madagascar, is seeking buyers, two people familiar with the matter said in February. Joosub declined to comment on whether Vodacom is interested in Telma.

Ethiopia is a market where Vodacom would like to be as it’s largely free of operators and mobile phone usage is low, the CEO said. He declined to say whether the country is among those targeted before 2015.

“We are all interested in Ethiopia,” Joosub said. “You’d be crazy not be.”

Ethiopia, which has a population of about 89 million, is among the most under-penetrated wireless markets in Africa. About 17 percent of the population had a mobile phone in 2011, according to data compiled by Bloomberg. That compares with 117 percent in Gabon and 65 percent in Kenya.

“Ethiopia has a big population that’s under penetrated in terms of mobile phones and could be a key player in the African growth story,” Aadil Omar, an analyst for Macquarie, said by phone. “If mobile money takes off there, alongside other African countries, you could have a really strong African business.”

To contact the reporter on this story: Chris Spillane in Johannesburg at cspillane3@bloomberg.net

To contact the editors responsible for this story: David Risser at drisser@bloomberg.net Kenneth Wong at kwong11@bloomberg.net

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