The dispute between Vodafone and Telkom South Africa over shareholding in Vodacom Group seems to be dying down after the South African government yielded and accepted Vodafone's latest bid.

Vodafone has made a nonbinding proposal to acquire a 15 percent stake in Vodacom Group for a cash consideration of 22.5 billion South African rand (US$2.5 billion), a statement from Vodafone read.

The agreement is subject to the listing and unbundling of Telkom's remaining 35 percent stake in Vodacom to Telkom shareholders.

"The proposed transaction would result in Vodafone owning 65 percent of an attractive asset with strong market positions in South Africa, Democratic Republic of Congo, Lesotho, Mozambique and Tanzania," the statement read.

Telkom SA owns 50 percent of Vodacom, and Vodafone owns the other half. At the center of controversy is a shareholder agreement between Telkom and Vodafone that limited expansion in sub-Saharan markets.

Vodafone's cash payment will be reduced slightly, as a portion of Vodacom's debt will be deducted from the purchase price.

The IDG News Service is a Network World affiliate.