Vodafone has snapped up a controlling stake in Ghana's third-largest mobile phone company for $900m (£450m) as the world's largest mobile phone operator continues to hunt for growth in emerging markets.
It acquired the 70% stake in Ghana Telecommunications, also the country's largest fixed-line operator, from the government as part of the company's privatisation. The government is retaining the rest but said previously that it would be floated on the local stockmarket.
The move is the latest by Vodafone to buy operations in fast-growing emerging markets as its traditional operations in western Europe face intense competition and regulatory pressure over pricing. Over the past three years it has bought businesses in Turkey and India, and last month offered £1.2bn to seize control of its South African joint venture, Vodacom, the country's largest mobile phone player.
Vodafone already has operations in Kenya and Egypt; Vodacom is also present in Tanzania, central Africa, Lesotho and Mozambique.
Ghana, the sixth-largest economy in sub-Saharan Africa, is one of the continent's fastest growing telecoms markets. About half the population of 24 million live in urban areas and more than half are under the age of 25.
The number of mobile phone users increased by more than 50% last year but still only about a third of people have a phone. That compares with a market penetration of more than 100% in western Europe - ie there are more phones than people.
At the end of last year Ghana Telecom had 1.3 million customers, giving it 17% of the local mobile phone market. The market is dominated by MTN, which has just over half of Ghana's mobile phone users. Tigo, owned by the Luxembourg-based Millicom, has 28%. The recent entrant Kasapa, owned by India's Hutchison, has just 3%.
Ghana Telecom has been losing out to its rivals over the past year and its market share has slipped slightly. Vodafone reckons the business can do better and is targeting a 25% market share by 2013.
The confusion over MTN's future may help Ghana Telecom. Africa's largest mobile phone operator has become a pawn in a game of sibling rivalry: the company was close to being taken over by Reliance Communications, run by Anil Ambani, the second-richest man in India.
Last month, however, his brother Mukesh Ambani, who controls the rest of the family business, Reliance Industries, moved to thwart the $50bn deal. Mukesh reckons he has the right of first refusal to buy back Reliance Communications because the deal with MTN would technically be a reverse takeover.
Vodafone came close to making an offer for MTN but decided that the price tag was too high and it would rather buy businesses across Africa and create its own empire.
Ghana Telecom, meanwhile, is also the country's number-one fixed-line and broadband provider, owning almost all the phone lines and 90% of the broadband market. The government is to transfer its own fibre network into the business and Vodafone plans to invest $500m over the next five years in the business and network. Last year Ghana Telecom made profits before financial charges of $42m, on sales of $290m.
"Ghana is one of the most attractive markets in Africa," said Vodafone's chief executive, Arun Sarin, who will step down this month, to be replaced by Vittorio Colao. "I expect that our investment will generate substantial benefits for Vodafone and for the Ghanaian economy and we are delighted that we will be working in partnership with the government of Ghana."