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.
Read also: Vodacom overtakes MTN as Africa's biggest mobile firm
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.”