Vodafone's stake in Vodacom fuels expansion in Africa

Vodafone is expected to further expand in Africa after South Africa's competition tribunal allowed the company to acquire another 15 percent of Vodacom from Telkom South Africa.

Vodafone can now pay more than US$2 billion (22 billion rand) to increase its stake in Vodacom and consolidate its expansion plans into the African mobile market, which has become a battleground for international companies.

Last year, Vodafone, which is based in the U.K., paid $900 million to acquire 70 percent of Ghana Telecom.

Vodacom is South Africa's largest mobile phone service provider with a presence in East Africa and the Southern African regions including Tanzania and Mozambique. Vodafone and Telkom each own half of Vodacom. But the acquisition of 15 percent more of the company means that Vodafone will own 65 percent.

Vodafone's objective was "to make a priority the increase of stake in Vodacom," said CEO Vittorio Colao.

Meanwhile, Telkom plans to unbundle its remaining 35 percent of Vodacom to diverse shareholders.

But Telkom claimed that giving Vodafone a larger stake in Vodacom is uncompetitive and will restrict Telkom's own Africa own expansion plans. Fears that the domination of foreign capital would create an economic and security risk also arose during the debate.

The competition tribunal, however, said it approved the 15 percent acquisition by Vodafone unconditionally.

Telkom plans to further dominate the telecom market by serving as a pan-African integrated service provider, offering international communications and connectivity, hosting and managing data service, and providing wireless voice and mobile broadband solutions.

Among growth strategies being considered by the Telkom is the transformation of its fixed-line business to incorporate key value-added services, including fixed-mobile converged services.