AT LEAST 50000 black citizens are expected to buy shares in Vodacom when SA’s most popular cellular network stages the biggest empowerment deal yet seen in the hi-tech sector. <\/p>\n
The R7,5bn move puts 6,25% of Vodacom SA up for grabs, valuing its local operations at R120bn. <\/p>\n
It is also one of SA’s largest employee share incentives, with staff of any colour getting free shares worth R1,87bn. <\/p>\n
Black staff will receive 70%, with three-quarters to be allocated now and a quarter reserved for future employees. <\/p>\n
“It’s truly broad-based and it was our intention from the outset to empower a broad base of black South Africans,” said CEO Alan Knott-Craig. <\/p>\n
“I am delighted for the staff because 14 years is a long time for them to watch everybody get shares in the company they work for, and it’s great ordinary South Africans can buy in.” <\/p>\n
The public offer comes at a 10% discount, but eliminates anyone with less than R2500 as the minimum investment for 100 shares. Yet Knott-Craig expects a huge response, even if people have to borrow money to buy in. <\/p>\n
“My hope is that we will attract about 50000 individuals,” he said. <\/p>\n
The entry barrier was set for practical purposes. <\/p>\n
“Administering a few million people with R2,50 each would cost more than the benefits. <\/p>\n
“I don’t think it’s a lot for someone to raise considering what they may get out of it.” <\/p>\n
Vodacom spoke to the banks and the offer was good enough for people to get a loan to fund their buy-in, he said. <\/p>\n
Three reasons make the offer attractive: the discount, the probability Vodacom will continue to rise in value, and a promise to pay dividends of at least 50% of its after-tax profit, which was R8bn last year. In total 14,4-million shares will be sold to the public at R25 each. Of those, 3,6-million are reserved for small business partners, mainly companies that distribute airtime. Other tranches will go to Thebe Investment and Royal Bafokeng Holdings, which were chosen as strategic investors. <\/p>\n
The staff offer will see lower paid employees allocated more shares than their higher-paid counterparts, with the average employee gaining free shares worth R300000. <\/p>\n
Knott-Craig said Vodacom had done well on empowerment in several areas, but was sadly deficient on black equity. <\/p>\n
“This transaction is long overdue and is a critical part of our success. If we weren’t to do this deal we’d harm our company from a commercial point of view.” <\/p>\n
Questions remain as to whether R7,5bn is enough to earn top marks for black equity. <\/p>\n
The hi-tech sector set the figure in its empowerment charter as a compromise to the 25% generally expected, as a realistic sum for investors to raise, yet not so onerous that foreign companies would withdraw from SA. <\/p>\n
The trade and industry and communications departments both congratulated Vodacom on its deal yesterday. <\/p>\n