VODACOM GROUP LIMITED - Acquisition of a further 17.2% interest in Vodacom Tanzania26 Nov 2013
VOD 201311260051A
Acquisition of a further 17.2% interest in Vodacom Tanzania

Vodacom Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1993/005461/06
(ISIN: ZAE000132577 Share Code: VOD)
(ISIN: ZAG000106063 JSE Code: VOD008)
(ADR code VDMCY                          ISIN US9258D2009)
("Vodacom" or "the Company")

ACQUISITION       OF      A     FURTHER        17.2%      INTEREST        IN     VODACOM

   1. Introduction
      Vodacom shareholders are advised that Vodacom has entered into an agreement with
      Cavalry Holdings Limited ("Cavalry") and its shareholders, under the terms of which
      Vodacom will acquire an additional indirect 17.2% interest in Vodacom Tanzania Limited
      ("Vodacom Tanzania") through the subscription for new shares in Cavalry (and
      consequently diluting Cavalry’s existing shareholders’ interest in Cavalry from 100% to
      51%) (the "Transaction"). The Transaction will result in Vodacom increasing its total
      economic interest in Vodacom Tanzania from 65% to 82.2%. Cavalry’s existing
      shareholders will retain an indirect 17.8% interest in Vodacom Tanzania. The
      Transaction is expected to close before the end of the financial year, subject to the
      fulfilment of a number of conditions precedent.

   2. Background information on Cavalry
      Cavalry is a private investment holding company and an indirect shareholder of
      Vodacom Tanzania through its interest in Vodacom Tanzania's existing strategic partner.

   3. Information on Vodacom Tanzania
      Vodacom Tanzania is the number one mobile operator in Tanzania that offers voice,
      data and mobile money services with 10 023 000 mobile customers as at 30 September
      2013. Vodacom Tanzania has been in existence since 1999.

   4. Rationale for the Acquisition
      The Transaction allows Vodacom to increase its exposure to one of Vodacom's key
      investments in sub-Saharan Africa. Vodacom Tanzania has been Vodacom’s most
      successful investment outside of South Africa to date. For the six months ended
      30 September 2013, service revenue grew 19.1% and the mobile customer base of
      10.0 million represents the largest operation in Vodacom’s international segment.
      Tanzania is an attractive telecoms market with mobile penetration only at 57% as at
      30 September 2013. This Transaction will increase Vodacom’s effective exposure to this
      high growth market. In addition, a new shareholders agreement in relation to Cavalry
      and an updated shareholders agreement in relation to the governance of Vodacom
      Tanzania have been entered into by the relevant parties, both of which shall become
      effective upon completion of the Transaction.

   5. Purchase consideration
      The consideration payable for the subscription of new shares in Cavalry is
      ZAR2 460 million, payable in cash at completion. There is no deferred compensation.
      Vodacom will fund the acquisition through available cash resources and existing debt
   6. Conditions precedent and representations and warranties
       As noted above, the Transaction is subject to conditions precedent typical of a
       transaction of this nature, inter alia:
   6.1 The approval by the South African Reserve Bank ("SARB"); and
   6.2 Satisfactory completion of a due diligence exercise on Cavalry and its subsidiaries on
       terms satisfactory to Vodacom.

   7. Pro forma financial effects
      The pro forma financial effects of the Transaction are presented for illustrative purposes
      only and because of their nature may not give a fair reflection of the Company`s financial
      position nor of the effect on future earnings after the Transaction. Set out below are the
      unaudited pro forma financial effects of the Transaction, based on the interim results for
      the six months ended 30 September 2013. The directors of Vodacom are responsible for
      the preparation of the unaudited pro forma financial information:

                                                          Before the           After the           % change
                                                          Transaction          Transaction

       Basic earnings per share (cents)                   442.5                443.4                 0.2
       Headline earnings per share (cents)                438.8                439.7                 0.2
       Net asset value (Rbn)                               22.0                 19.5                (11.6)
       Tangible net asset value (Rbn)                      27.3                 24.7                 (9.4)

       a) The figures in the “Before the Transaction” are based on the reviewed results of Vodacom for the six
            months ended 30 September 2013.
       b) The basic earnings per share and headline earnings per share figures in the “After the Transaction”
            column have been calculated on the basis that the acquisition was effected on 1 April 2013. The impact
            on net profit attributable to equity holders for the six months ended 30 September 2013 was a net
            increase of R13 million.
       c)   The net asset value and net tangible asset value figures in the “After the Transaction” column have
            been calculated on the basis that the acquisition was effected on 30 September 2013.
       d)   The taxation impact of the Transaction is immaterial.
       e)   There are no post balance sheet events which need to be taken into account in the pro forma financial

   8. Fairness opinion
      Cavalry is classified as a related party to Vodacom in terms of the JSE Listings
      Requirements. The Transaction is classified as a small related party transaction and the
      board of directors of Vodacom (the "Board") is therefore required to obtain an opinion
      from an independent professional expert acceptable to the JSE regarding the fairness of
      the Transaction to Vodacom shareholders. The Board has appointed UBS South Africa
      (Pty) Limited ("UBS") to provide an opinion as to the whether the terms and conditions of
      the Proposed Transaction are fair to Vodacom shareholders. Subject to the conditions
      set out in UBS's opinion letter, UBS has provided an opinion that the terms and
      conditions of the transaction are fair to Vodacom shareholders. The opinion letter is
      available for inspection at the offices of Vodacom (Vodacom Corporate Park, 082
      Vodacom Boulevard, Midrand, 1685) for a period of 28 days from the date of this

26 November 2013
Sponsor: UBS South Africa (Pty) Limited

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