Vodafone offers $2.5 billion to increase its stake by 12.5 per cent in South Africa's Vodacom

That South Africa is the next engine to drive mobile usage growth has already been amply demonstrated by the amazing growth figures and the interest shown in the region's largest domestic communications entity MTN by two of its largest peers in India and other companies. If further clarification is needed of the fact, Vodafone's interest in increasing its stake in South Africa's Vodacom will serve to provide one. (See: Reliance Communications in acquisition talks with MTN after Bharti withdraws)

UK-based Vodafone, the largest telecommunications company in the world by annual revenue (China Mobile beats it in terms of subscriber numbers) has reportedly offered Rand18.75 billion ($2.5 billion) for a 12.5-per cent stake in Vodacom, its 50:50 joint venture with Telkom South Africa Ltd. The latter, in turn, is controlled by the government and Public Investment Corporation who own 38 per cent and 15 per cent respectively.

In filings to the New York and Johannesburg Stock Exchanges, Telkom said it has received a "non-binding" proposal from a subsidiary of Vodafone on 30 May.

"Telkom received a non-binding proposal from a wholly-owned subsidiary of Vodafone Group Plc to acquire a portion of Telkom's stake in Vodacom Group (Proprietary) Ltd (Vodacom) subject to, inter alia, the company unbundling its remaining stake in Vodacom to Telkom shareholders," the filing said.

Last week, Vodafone while announcing its annual results, had expressed its interest in buying stake in Vodacom.

The offer follows local investment house Mvelaphanda saying it wanted to pick up Telkom's fixed-line operations for R90 billion, followed by announcements that it may consider buying the entire company. However, both these offers are conditional that Telkom relinquishes the remaining 37.5 per cent by unbundling those shares to Telkom's shareholders.

In the aforementioned filing, Telkom said that it has received a letter from a consortium comprising Mvelaphanda Holdings (Proprietary) Ltd, affiliated funds of Och-Ziff Capital Management Group and other strategic funders, saying it was considering making an offer for the entire issued share of the firm.