Vodacom had been vying with African rival MTN Group for market share as the continent's people and businesses demand higher speeds and better connectivity to access financial services, entertainment, education and enterprise solutions, especially spurred by the coronavirus pandemic.
"The proposed acquisition presents a unique opportunity to advance Vodacom Group's strategic connectivity and financial services ambitions in Africa," Vodacom said in a statement.
The deal combines South Africa's largest mobile operator with Egypt's telecom market leader, strategically positioning Vodacom to capture growth in a fast-growing information communications and technology market.
It would also expand Vodacom Group's reach to 37,000 network sites, making it one of Africa's largest tower owners, Vodacom said.
"It is expected to diversify and accelerate Vodacom Group's medium-term operating profit growth potential into double digits," it added.
The share swap plus cash offer will increase parent Vodafone's stake in Vodacom to 65.1% from 60.5%, the firm said.
Telecom Egypt, which holds 44.94% of Vodafone Egypt, said on Wednesday it had received notice from the company's management of an offer to transfer the majority stake to Vodacom.
Vodacom Group Chief Executive Shameel Joosub told reporters at a conference that the company could potentially look to expand its newly launched Voda Pay digital financial services "super app" in the Egyptian market.
Separately, Vodacom said it would spend up to 10.2 billion rand for a controlling stake in the fibre assets of Community Investment Ventures, a holding company for Vumatel and Dark Fibre Africa, giving it access to millions of homes and thousands of kilometres of fibre infrastructure in South Africa.
(Reporting by Enas Alashray in Cairo, Aby Jose Koilparambil in Bengaluru and Nqobile Dludla in Johannesburg ; Editing by Promit Mukherjee and Clarence Fernandez)
By Enas Alashray and Nqobile Dludla