ft.com/alphaville

Vodafone’s strategy of seeking to boost growth by expanding in emerging markets took a big step forward Thursday night when it announced a R22.5bn ($2.5bn) offer for a controlling stake in Vodacom, South Africa’s biggest mobile phone operator. A deal would see Vodaphone, which has a 50% stake in Vodacom, buy a 15% stake from Telkom, the South African state-controlled telecoms company that owns the other half of Vodacom. The bid has the approval of Telkom’s board and the South African government, the final arbiter of any deal, but is contingent on Telkom distributing the remaining 35% of its holding to its shareholders. Vodacom’s net debt, which stood at R5.2bn at the end of March, would be deducted from the final price. Vodafone is expected to fund the transaction from its existing debt facilities and cash, allowing it to steer clear of the turmoil in global credit markets. The proposed deal will come as a fillip to investors in South Africa, where other deals have been scuppered by lack of debt financing internationally.