The Vodacom Debacle
Some believe it was all about blocking Mbeki allies from benefiting
Vocadom’s listing on the JSE on Monday sparked a buzz of speculation on what was behind the Independent Communications Authority of SA’s shock attempt to scupper it.
It is well known that Icasa’s decision to rescind an earlier finding on Telkom’s sale of 15% of Vodacom to Vodafone, a move which had Monday’s listing hanging in the balance as late as Sunday evening, was prompted by Cosatu, which approached Icasa and asked it to change its mind.
But talk of other political interference will not go away.
At the core of the speculation is the acceptance that the new administration would not want to see Thabo Mbeki allies including Andile Ngcaba, Gloria Serobe and Smuts Ngonyama, who form the core of the Elephant Consortium, the major BEE players in Telkom, benefiting from Vodacom’s listing.
The route to getting them out would be convoluted, if not impossible, and would require the unwinding of the Telkom/Vodafone deal, which was attempted last week, as well as the unwinding of Telkom’s BEE deal, which was concluded more than three years ago.
Various people speculated that the political interference was aimed at making sure allies of Jacob Zuma, and specifically businessman Sandile Zungu, get a cut of the Telkom and Vodacom shares. Ironically, Zungu has a longstanding fight with government over Transnet’s sale of shares in MTN, a fight which, it is understood, he is still intending to pursue in court.
Pieter Uys, Vodacom’s CEO, said that although the weekend had been filled with deep concern, once Vodacom was listed and its results were released he felt relieved.
He believed outstanding issues, like Cosatu’s proposed boycott of Vodacom, were manageable and could be resolved through dialogue.
Vodacom started trading on Monday at R59.50 and despite an initial strong showing, it ended the week at R56.85.
On Tuesday, it announced a 21% drop in headline earnings for the year to March on a 14.5% increase in revenue to R55.2- billion and a 3.9% decrease in operating profit.
Uys said earnings before interest, tax, depreciation and amortisation were up 10.5% to R18.2-billion, but earnings were affected by a R1.3-billion charge for its empowerment deal, significantly higher finance costs of R1.46-billion and some foreign exchange losses.
Vodacom’s customer base rose 16.5% to 39.6 million.
The results reflect the culmination of an empowerment deal, a major acquisition of pan-African carrier services and connectivity provider, Gateway, a change in leadership, Telkom’s sale of 15% of Vodacom — giving Vodafone majority control — and Vodacom’s JSE listing.
Now Vodacom, no longer constrained by a debilitating shareholders agreement which restricted its expansion into Africa, among other things, hopes to make the most of its closer relationship with Vodafone.
Decision-making would be expedited, and Vodacom would be able to tap into the global giant’s purchasing power, research and development, and innovation.
Vodacom JSE listing discussion
Business Times
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