Vodacom mulls R15bn empowerment stake

Johannesburg - Vodafone Group’s South African unit is

considering the sale of a R15 billion ($1.1 billion) stake in what would be one

of the country’s biggest-ever deals aimed at boosting black participation in

the economy, according to two people familiar with the matter.

Vodacom Group plans to buy back part of the 12.47 percent

stake owned by the government’s pension-fund manager, the Public Investment

Corporporation, said the people, who asked not to be identified because the

deliberations are private. The shareholding could then be listed as a separate

entity restricted to black investors, they said. Negotiations with the PIC are

ongoing and an outcome is expected in coming months, said one of people.

“Vodacom is committed to delivering on the ideals of

black economic empowerment and continue to explore a variety of options with

the primary objective of broad-based inclusivity,” a spokesman said in e-mailed

comments, without directly commenting on whether such as a transaction is being

considered. “Any transaction of this nature will be conducted through a

well-governed, highly transparent process.”

Replacement programme

The deal would help South Africa’s market leader in terms

of mobile subscribers to comply with a government initiative to help compensate

those discriminated against during apartheid. Under new guidelines effective

November 7, telecommunication companies should aim to be 30 percent black

owned, a third of which must be held by black women. With Vodacom’s existing

black empowerment deal coming to an end in 2018, the company plans to put

together a replacement program in line with the new policy, said one of the

people.

Vodacom shares rose 0.6 percent to R151.95 as of 9:08 am

in Johannesburg on Thursday, valuing the company at R226 billion.

“It may be more optimal for Vodacom to buy its own shares

back from the PIC and to implement a black empowerment offering with all the

requisite groups” rather than a direct sale by the PIC, said Soria Hay,

director of Bravura Capital in Johannesburg, which helps facilitate black

economic empowerment transactions. 

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The PIC, which manages government worker pensions and is

Africa’s biggest money manager with R1.86 trillion in assets, acquired the

Vodacom stake from the government in 2015. The Pretoria-based company has

considered previous sales to consortiums of prominent black business people,

one of which included former senior Vodacom executive Romeo Kumalo.

Double down

Vodacom’s new empowerment program would be double the

size of the R7.5 billion plan that ends next year. Beneficiaries of that fund

include employees and black-owned investment companies Royal Bafokeng Holdings

and Thebe Investment Corporation who can sell their shares when the program

ends. Cross town rival MTN Group started a R9.9 billion empowerment plan at its

South African unit last year that boosted its black ownership to more than 30

percent.

The governing African National Congress has pledged to

ensure the country’s black majority secures a bigger stake in the economy as it

seeks to claw back support lost in the wake of a succession of scandals

implicating its leader, President Jacob Zuma. Many black South Africans are

growing impatient at the slow distribution of wealth in an economy where whites

still earn more than blacks and dominate the boards of most businesses.

“Radical economic transformation remains at the core of

our economic strategy,” Zuma said at a rally this month to mark the ANC’s 105th

anniversary. “More decisive steps must and will be taken to promote greater

economic inclusion and to advance ownership and control and real leadership of

the economy by black people.”

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