South Africa could reportedly sell its stake in a Vodafone Group unit as it moves to dispose of state assets in a bid to raise funds for electricity generation needed to fuel economic growth.

The South African government owns 13.9% of Vodafone-controlled Vodacom Group, worth some 28bn rand ($2.4bn, £1.6bn, €2.1bn).

The government does not consider the stake as strategic because of its size and a sale will perhaps not face opposition from labour unions, Bloomberg reported.

Vodafone owns 65% of Vodacom and is disinclined to buy the government's stake in the phone company, as it is comfortable with its holding, the report said.

Telkom and SAA

The state also owns 39.8% of fixed-line phone firm Telkom SA SOC, some land, and a 20% stake in South African Airways (SAA).

But Telkom will be a difficult asset to dispose as a transaction will probably face opposition from labour unions as the company is already trying to cut jobs. A transaction could also be opposed by antitrust regulators, the report said.

MTN Group, Africa's largest wireless operator, has considered acquiring a stake in Telkom, the report said.

SAA, which announced losses of 2.5bn rand and the cancellation of its Beijing route on 30 January, could also be sold, with the airline in preliminary talks with China-based airlines, the report added.

Pursued by Bloomberg, spokesmen for Vodafone and SAA refused to comment. A Telkom spokeswoman was not immediately available for comment.

South Africa could raise over 86bn rand from the sale of publicly traded assets and real estate, Barclays said in a 13 January research note.

The country's last major asset sale was in March 2003, when it sold 25% of Telkom for 3.9bn rand.