Vodafone closes South African deal despite union fight

Vodafone is taking a controlling share in its South African joint venture Vodacom following a South African court’s decision to throw out an eleventh-hour bid to block the deal.

The UK firm increased its stake in the country’s largest mobile operator from 50% to 65% in a deal which saw the remaining 35% stake, held by state-run partner Telkom, divided between fund managers and the open market.

Court action late last week by trade union federation Cosatu postponed the deal when the country’s regulator decided to freeze the transaction pending public hearings scheduled for later this month. Cosatu says it does not trust Vodafone’s assurances that no jobs will be lost. The federation also says it is not happy with a foreign company taking control of a major firm.

However, a court threw out the federation’s claims, allowing Vodafone to close the USD2.6bn deal.

Vodacom controls 58% of the South African mobile market and operates in a further five African countries.

Vodafone is expected to speed up a USD1bn cost-cutting plan when it releases what analysts anticipate to be disappointing full-year results later this week. The company is expected to commit to cutting GBP500m (USD765m) over the next year, and another GBP500m (USD765m) by March 2011, as pressures on its European operations cause a decline in revenues.