BEE Scares off Vodafone

[Dovi]

UK-based mobile provider Vodafone has confirmed it is not interested in buying Telkom's entire 50% shareholding in SA's largest mobile operator Vodacom. However, it would like to acquire a majority share.

Reuters reports that Vodafone, which holds the other 50% equity shareholding in the company, has been put off by SA's black economic empowerment (BEE) policies.

The news service states that Vodafone CEO Arun Sarin explained to a Goldman Sachs investor conference in New York this week that if Vodafone bought the full 50% Vodacom shareholding, it risked securing the shares at retail price, only to sell part of the stake at a wholesale price in a BEE deal.

A Vodafone spokesman says the company is only interested in acquiring a smaller piece of the shareholding so it can gain control of Vodacom. He would not specify the size of the additional Vodacom stake Vodafone is seeking to acquire. Local analysts value Telkom's Vodacom stake at about R75 billion.

The Vodafone spokesman declines to clarify how the company will comply with government's BEE policy.

Telkom also refuses to clarify whether it will sell the rest of the Vodacom stake not acquired by Vodafone, or whether it would remain a minority shareholder in the mobile company.

A Telkom spokesman says the fixed-line operator has communicated its intentions via cautionary and has nothing else to add.

Talk that Vodafone would buy Vodacom's entire equity was sparked last month when Telkom issued a cautionary announcement, saying it had entered into discussions with Vodafone that could see the fixed-line utility sell its mobile assets.

BMI-TechKnowledge senior analyst Richard Hurst says the fact Vodafone would not buy the entire 50% shareholding is not a bad thing. Telkom could still find other buyers, he says. “This is good news for Telkom, despite the fact that its share price dipped at the news. Telkom will still have a cash cow.”

BEE obligations

Vodacom previously stated it was in talks that would see 7.5% to 10% of the company sold to empowerment partners. Vodacom employees are to gain a quarter of that deal, the company said at the time.

Communication Workers Union spokesman Mfanafuthi Sithebe says the union is opposed to Vodafone's plan to buy more of Vodacom.

“Foreign ownership of local companies should be limited, as a majority shareholding by an international company means that dividends will leave the country,” he says. “SA has a social development agenda and it cannot afford to have resources leave the country.”

ITWeb - http://www.itweb.co.za/sections/business/2007/0709201100.asp?A=TEL&S=Telecoms&O=FPLEAD

 

[milomak]

How has it scared them off again?

 

[PeterCH]

“Foreign ownership of local companies should be limited, as a majority shareholding by an international company means that dividends will leave the country,” he says. “SA has a social development agenda and it cannot afford to have resources leave the country.”

It's actually a poor sign if foreign corps are unwilling to buy a local company. Maybe it's better for local pride and "Proudly South African!" BS, but maybe just- maybe that 50% isn't really worth R75 billion in a country which could become Zimbabwe within a few years.

 

[diabolus]

Well, as Vodafone clearly pointed out. It does not make sense to buy the entire 50% at "full price" and then be forced to "hand out" 25% of that back to BEE at some "cheap BEE rate" .

The logical thing to do is to only buy 25% and let Telkom/Vodacom themselves sell off the remaining 25% to a BEE partner [so THEY take the loss] .

 

[ic]

IMO there always had to be a BEE deal to satisfy SA's self-enrichment gravytrain passengers, and it is common knowledge that Vodafone only needs operational control over Vodacom, Vodafone doesn't need to spend more than it absolutely has to in order to gain operational control over Vodacom, this was entirely predictable - especially considering the hostile guavamental telecommunistications framework in SA.

Communication Workers Union spokesman Mfanafuthi Sithebe says the union is opposed to Vodafone's plan to buy more of Vodacom.

“Foreign ownership of local companies should be limited, as a majority shareholding by an international company means that dividends will leave the country,” he says. “SA has a social development agenda and it cannot afford to have resources leave the country.”

why is it that everytime the CWU lets loose some spokesperson, that spokesperson is a complete and utter idiot?

Vodafone invested foreign currency in South Africa by acquiring 50% of Vodacom, for the benefit of the idiotic communists over at CWU, that is called foreign investment, and amounts to a substantially large amount of money that came into South Africa, and according to the CWU, Vodafone should not be allowed to have a return on its investment - all the money must stay in South Africa...

In order to get foreign companies to invest in SA, those companies have to be allowed to have a return on their investment, and that return needs to be able to flow out of SA.

This is not the same as what happened with SBC taking millions out of SA via its previous shareholding in Telkodemonopolies, that was IMO a result of financial mismanagement within Telkodemonopolies, as well as a failure of the SA Reserve Bank.

If anything, SA's Reserve Bank policies are anti-foreign-investment.

 

[kilo39]

BMI-TechKnowledge senior analyst Richard Hurst says the fact Vodafone would not buy the entire 50% shareholding is not a bad thing. Telkom could still find other buyers, he says. “This is good news for Telkom, despite the fact that its share price dipped at the news. Telkom will still have a cash cow.”

So forumites: how does it feel to be "a cash cow?"

(well it seems vodafone told 'em what to do with their african wedding)