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Fresh from boosting its stake in Poland's Polkomtel, Vodafone has increased its holding in another of its key target markets, South Africa. Its Rand22.5bn ($2.5bn) bid for a further 15% of leading cellco Vodacom has been accepted, taking its stake to 65%.

This finally fulfils the UK-based giant's long standing desire to have a controlling interest in Vodacom, which was set up as a 50:50 joint venture with incumbent Telkom, and which has strong positions in its home country plus Democratic Republic of Congo, Lesotho, Mozambique and Tanzania.

Control of the venture is likely to see Vodafone accelerating its expansion programme in other sub-Saharan African territories that can expect to see rapid growth in the next decade. Vodafone has agreed to preserve the Vodacom brand, and that Vodacom will be the exclusive investment vehicle through which it will make acquisitions in sub-Saharan Africa, excluding Ghana and Kenya where Vodafone is already present.

The deal still hinges on Telkom being able to divest its remaining 35% stake to Telkom shareholders.

Despite all this expansion in growth markets, fears persist in London that Vodafone could issue a profits warning, after it contacted analysts to gauge latest forecasts, according to The Times. Vodafone shares fell 7% when the news emerged, as speculation grew that the group was trying to dampen down market expectations ahead of half-year results next week. UK incumbent BT issued a profit warning on Friday.

Vodafone has about 120m customers in emerging markets, in a total of 260m as of March 2008. Its Indian business was the main driver behind a 22% revenue growth in emerging markets last year, but other territories like Egypt, Romania, Turkey and the Czech Republic have seen slowdown in 2008, and nearly 80% of revenues still come from low growth developed economies. These statistics have led some analysts to worry about margins and cashflow, though Robert Grindle of Deutsche Bank commented that Vodafone's low share price was "at odds with the company's resilience in the face of recent price deflation, regulation and competition".

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