Telecel plans IPO after takeover of Vodafone Ghana
Senior officials of Telecel say they intend to use the Vodafone Ghana acquisition as a launch pad to the capital markets to raise funds for its operations in Ghana.
Telecel has, therefore, indicated that it plans to issue an Initial Public Offer (IPO) once the acquisition goes through all regulatory approvals from the government for it to acquire majority stake in Vodafone Ghana.
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The $500 million all-cash deal is part of Telecel’s expansion strategy into Africa.
A Bloomberg report quoted the head of Telecel Group, an Africa-focused telecommunications company part-owned by French tycoon Hugues Mulliez, as saying that the purchase of Vodafone Group Plc’s operations in Ghana was part of a plan to expand its African operations and go public within the next five years.
The move, when consummated, is expected to make Telecel the second player after MTN Ghana to list on the Ghana Stock Exchange (GSE).
The Telecel CEO said the company would pursue more deals in West Africa.
By way of improving the quality of service, Telecel plans to install 2,000 additional towers in the country over the next two years after it starts operations in the country.
Takeover approval
The National Communications Authority (NCA) granted a conditional approval to Telecel, subject to concessions made by Vodafone and representations made by the company.
It was pursuant to the evaluation of the revised proposal from Telecel Group which made its intentions known early last year.
In January 2022, the NCA received an application from Vodafone Ghana for the transfer of 70 per cent of its majority shares held by Vodafone to Telecel.
In accordance with due process, the NCA evaluated the application on various criteria and engaged both Vodafone Ghana and Telecel.
Telecel is acquiring Vodafone Ghana’s operations in what has been described as an “all-cash-deal”. An all-cash deal refers to any transaction where cash is exchanged for an asset.
The buyer offers the seller cash and there is no use of financing to purchase the asset or any other means, such as an exchange of stock.
Capital injection
Telecel intends to spend about $500 million in the first three years to expand and refinance Vodafone’s network across the country.
The move is necessary because Vodafone Ghana has been starved of cash by its shareholders for many years, creating a lot of financial challenges for the company which finds itself within a highly competitive market.
Vodafone entered Ghana in 2008, when it paid the government $900 million for 70 per cent of Ghana Telecommunications Company.
The state retains a 30 per cent minority shares in the business but has since not contributed additional funds needed to recapitalise the ailing company.