Vodacom’s BEE deal
South Africa’s cellphone giant Vodacom has identified two preferred bidders for a 5% empowerment stake, worth R5.5-billion, in the company. Vodacom is scheduled to make an announcement about its empowerment deal later this month.
Business Times has established that one of the consortiums is Mowana Five Mile Communications, headed by Nkenke Kekana, a former chairperson of the parliamentary portfolio committee on communications who also served as a group executive for Telkom.
The other consortium involves former Scorpions boss-turned-businessman Bulelani Ngcuka.
Black staff within Vodacom will acquire the remaining portion of the empowerment stake, worth R1.8-billion.
The shortlisting process for the empowerment deal has been a closely guarded secret, and the bidders have signed confidentiality agreements with Vodacom.
The two consortiums went head to head with another five empowerment groups, that were whittled down from about 60 initial bidders, by Vodacom’s board and the transaction adviser, Rand Merchant Bank.
On Friday, Vodacom spokesman Dot Field declined to confirm the selection of the preferred bidders.
“These are shareholder issues and need to be addressed by them,” she said, referring Business Times to the cellphone operator’s joint shareholders, Telkom and the UK’s Vodafone.
Telkom spokesman Lulu Letlape also declined to comment.
“Telkom is currently under a cautionary dated October 11 2007 and therefore cannot comment on the matter,” she said.
Speaking from the UK, Vodafone’s spokesman Mark Pursey said Vodafone did not comment on market speculation.
But Business Times has established that Vodacom took a surprise decision to speed up the empowerment deal by almost five months after it emerged that the Telkom board was planning to off- load its fixed-line phone business, and its 50% stake in Vodacom.
Last month, Business Times reported that Telkom, which is partly state-owned and has a market capitalisation of about R97-billion, received two offers for its telecommunications assets.
Cellphone group MTN has made a bid for the fixed-line business while a private consortium, headed by businessman Barend Hendricks, is making a play for 35% of Telkom’s holding in Vodacom.
Telkom’s 50% holding in Vodacom is valued by analysts at more than R75-billion.
The offers from MTN and Hendricks’s consortium will be taken into consideration at Telkom’s board meeting this month.
The two offers to Telkom were made shortly after Vodafone, one of Britain’s biggest cellphone network operators, announced plans to acquire 15% of Telkom’s stake in Vodacom.
If Telkom sells off its 50% stake in Vodacom — 35% to Hendricks’s consortium and 15% to Vodafone — and its fixed-line network to MTN, the company would become a shell, holding billions of rands.
Vodacom, meanwhile, has remained tight-lipped over its preferred bidders, as did some of the bidders that were approached for comment by Business Times.
Prominent politician-turned- businessman Saki Macozoma, who is also known to be bidding for the stake, and Ngcuka could not be reached for comment .
Business Times had earlier revealed that Lewatla Telecoms Consortium, headed by a former director-general of the Department of Trade and Industry, Alistair Ruiters, was also in the running.
Other contenders for the stake included former Vodacom deputy chief executive Andrew Mthembu, former Vodacom chairman Wendy Luhabe, and former Department of Communications director-general Andile Ngcaba.
Kekana’s Mowana Five Mile Communications, which had been tipped as early as May as a front runner, lists among its members the former chairman of the Independent Communications Authority of SA, S’bu Mngadi, who is a former executive of cellphone operator Cell C.
Vodafone, which owns the other 50% stake in Vodacom, is still on track to acquire an additional 15% stake from Telkom — which would make the UK company the majority shareholder.
Vodafone’s majority stake in Vodacom may further hamper the South African company’s growth.
Vodacom is bound to a shareholder agreement with Vodafone that prevents it from expanding further north.
The agreement has lost Vodacom more than 15 lucrative opportunities to rival MTN and other telecommunications companies in the rest of Africa.
Vodafone, which already has controlling stakes in cellular companies in Kenya and Egypt, has its own plans for Africa and wants to limit Vodacom to SA.
In a transcript taken from a Goldman Sachs conference in New York last month, Vodafone chief executive Arun Sarin said Vodafone did not want to own, but rather secure control of, Vodacom.
“Telkom are 50% partners in Vodacom and I understand that there is a strategic review going on.
“Frankly, I’m not privy to precisely what the strategic review is going to yield,” Sarin said.
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