Vodacom Group Ltd., the South African mobile-phone company controlled by Vodafone Group Plc, agreed to sell its terrestrial and satellite-services unit to PCCW Ltd., said people with knowledge of the matter.
PCCW, the Hong Kong-based phone company whose chairman is billionaire Richard Li, has signed an agreement to buy the carrier unit of Gateway Communications from Vodacom and an announcement may be made by next week, said the people, who declined to be identified because the talks are private.
Vodacom is disposing of parts of Gateway after paying about $700 million for the unit less than four years ago. The company, the largest provider of wireless services to South Africans, is selling the division after traffic volumes slumped to focus on its own wireless operations in southern Africa. The unit may fetch about $100 million, according to analyst estimates at Afrifocus Securities.
“Gateway covers huge swathes of the continent and doesn’t have a great strategic fit with Vodacom,” said David Lerche, an analyst at Avior Research Ltd. “Why own a carrier business that serves Nigeria, for instance, when you don’t have an operator there?”
Representatives of Vodacom, Vodafone and PCCW declined to comment.
Vodacom fell 1.4 percent to 97.39 rand at 3:36 p.m. in Johannesburg trading.
PCCW is expanding its networks business for multinationals and carriers in Africa to counter domestic competition from companies including China Mobile Ltd. and Hutchison Telecommunications Hong Kong Holdings Ltd. The company will gain Vodacom as a customer under the deal, one person said.
PCCW’s HKT Trust and HKT Ltd. unit offers international telecommunications to businesses and carriers and is the biggest fixed-line operator in Hong Kong. PCCW Global, the international arm of HKT, is buying assets from Vodacom, a person said.
The initial public offering of HKT in November raised HK$9.3 billion ($1.2 billion) for parent PCCW.
The unit’s full-year profit rose 32 percent as mobile-phone revenue increased. PCCW now focuses on pay-television and computer services operations, and retains more than 50 percent of HKT after last year’s listing.
Vodacom acquired Gateway in 2008, adding a seller of telecommunications links to businesses and phone companies across Africa. The company took an impairment charge of 3.2 billion rand ($378 million) on the unit a year later after traffic volumes over satellite declined following the deployment of additional fiber-optic cables into east and west Africa. Vodacom said in its annual report on May 21 that it was in “an advanced stage of disposing” of Gateway.