Vodafone is seeking to gain control of Vodacom, South Africa’s largest mobile operator, in a deal that could be worth £5 billion and would broaden the British giant's reach in fast-growing markets across the African continent.

The world's largest mobile group currently shares ownership of Vodacom 50-50 with Telkom, its South African peer. It is understood that Telkom is in talks to sell its share in Vodacom, which accounts for nearly 60 per cent of the South African mobile market, to Vodafone in a deal that could be worth more than R70 billion (£4.8 billion).

Should that sale go through, it is understood that rival African telecom operator MTN is set to take a stake in Telkom. MTN could buy out the 30 per cent stake in Telkom owned by the South African Government to give it a foothold in fixed-line services, sources said.

Telkom yesterday confirmed that it is holding talks with Vodafone and MTN as part of a review of its business but declined to give details.

"No decisions regarding the conclusion of this review process have yet been reached," it said in a brief statement to the Johannesburg securities exchange.

The news lifted shares in Telkom to record highs, valuing the group at more than R100 billion (£7 billion).

Vodafone has long coveted control of Vodacom, which has operations in South Africa, Mozambique, Lesotho, the Democratic Republic of Congo and Tanzania, and would fit with the British giant’s renewed interest in Africa, where many users are leapfrogging fixed-line services to take up mobile telephony.

In its latest reported quarter, Vodacom said its total number of customers increased by nearly 30 per cent to more than 32 million in the three months to the end of June, from the same period a year earlier. Revenues were up 19 per cent.

Vodafone last year reaped operating profits of £327 million from its half-share in Vodacom. Revenues for its 50 per cent stake in the group were £1.5 billion.

Arun Sarin, the Vodafone chief executive, confirmed in July that he was interested in increasing the company's stake in Vodacom, should Telkom decide to exit or decrease its ownership.

However, observers suggested that obstacles remain: it is understood that Telkom has so far been unimpressed with the price mooted by Vodafone for the mobile business. Relationships between the two companies are thought to have become strained after disagreements over Vodacom’s direction.

Sources also said that Vodafone could yet be satisfied with a majority stake that falls short of full ownership of Vodacom.

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