BEE has a sting in the tail for Vodacom

1 Apr 2008

Vodacom South Africa is facing a potential legal challenge over a planned ZAR7.5 billion (USD926 million) share sale. South Africa’s largest cellco is offloading a stake of around 7% to comply with Black Economic Empowerment (BEE) legislation requiring local businesses to have a cross-section of shareholders to better reflect the demographic make-up of the country as a whole. However, a lawsuit is being filed by the Tiger Consortium, which was set up in 2004 by black Vodacom employees and a number of black-owned business groups, and which failed in an earlier bid to buy a stake in Vodacom. The consortium says that the cellco has used components of its application in the current BEE proposal and is thought to be claiming ZAR7.5 billion damages. Vodacom has shortlisted a number of business partners such as retail outlet franchisees and payphone operators as potential black investors, and Tiger is not thought to have made the final shortlist. Shares are also being offered to the public and to black Vodacom employees. Vodacom’s two parents – Vodafone of the UK and Telkom South Africa – are thought to be divesting equal stakes in the cellco.

South Africa, Vodacom Group