Vodacom is one of South Africa’s most successful companies, with 45 million subscribers in South Africa and 42 million in the rest of Africa.
Over the last twelve months, Vodacom generated revenue of R103 billion and a net profit of R18 billion.
South Africa benefits from Vodacom’s success through corporate and income tax, employing thousands of people and fuelling local and international trade.
However, most of the dividends paid by Vodacom leave the country. This is because Vodacom is majority-owned by Vodafone, with a 60.5% stake in the operator.
When Vodacom was founded as a joint venture in 1993, Telkom owned 50%, Vodacom owned 35%, and Venfin owned 15%.
When Venfin decided to sell its stake in Vodacom, Telkom passed on the opportunity, and Vodafone snapped it up.
This blunder created a challenging situation where Telkom and Vodafone each had a 50% share in Vodacom.
What followed was the biggest blunder in South African telecommunications history.
Towards the end of 2008, Telkom agreed to sell 15% of its stake in Vodacom to Vodafone Group. It distributed its remaining 35% to its shareholders through an unbundling process.
Telkom decided to build its own mobile operator, 8ta, to take on Vodacom, MTN, and Cell C.
Although moderately successful, Telkom Mobile’s revenue and profit are a far cry from what it would have earned through Vodacom.
Vodacom’s current shareholding
Vodacom’s biggest shareholders are the UK based Vodafone with 60.5%, the Government Employees Pension Fund (GEPF) with 23.54%, and the YeboYethu scheme with 6.23%.
Institutional investors own 15.76% of Vodacom, while retail investors account for a shareholding of only 2.96%.
Vodacom’s biggest institutional shareholders are BlackRock Advisors, The Vanguard Group, and Lazard Asset Management.
41% of institutional shareholding comes from the United States, 27% from South Africa, 14% from the United Kingdom, 9.3% from Europe, and 8.6% from Asia.
An interesting shareholder in Vodacom is Wheatfield Investments 276 (Pty) Limited, which owns 15,421,231 shares representing a 0.84% holding.
Wheatfield 276 is a wholly-owned subsidiary of Vodacom Group, which holds Vodacom treasury shares. The treasury shares have been in place for more than a decade.
These shares are held as a result of a share buy-back implemented in 2010. Instead of cancelling the shares, Vodacom decided to hold them in Wheatfields.
As these are treasury shares, they are removed from Vodacom’s gross number of issued shares when calculating our earnings per share.
At Vodacom’s current share price of around R143, Wheatfield Investments 276’s shares are worth over R2.2 billion.
The charts below show who owns Vodacom and where they come from.