Vodacom eyes government stake in a bid to meet BEE requirements

12 May 2011

According to BusinessLive.co.za, Vodacom South Africa is considering lodging a bid for the South African government’s 13.9% stake in the operator, in an effort to fulfil Black Economic Empowerment (BEE) criteria, which stipulates that at least 30% of every registered company must be owned by black investors. The stake is reportedly worth around ZAR16.5 billion (USD2.4 billion). BusinessLive reports that Vodacom CEO Pieter Uys met with Communications Minister Roy Padayachie last week, with a view to starting negotiations over the government’s stake. However, it is understood that the prospect of a fully-fledged deal was not discussed at the meeting. Ministry of Communications spokesperson Tiyani Rikhotso commented: ‘Vodacom has, however, raised concern about its inability to meet the empowerment percentage of 30% and was keen to know government’s intentions with its stake going forward’.

In 2008 Vodacom initiated a BEE transaction in which around 6.25% of its shares were disbursed; the deal was worth approximately ZAR7.5 billion. However, the ensuing years have seen Vodacom’s value increase, thus diminishing the value of its BEE stake in the process. The operator has limited leeway in fulfilling its BEE requirements, as 65% of the company is presently held by UK-based telecoms group Vodafone, with around 20% of shares in free float. TeleGeography notes that there was previously a ZAR7.5 billion ceiling on the size of the stake that needed to be sold in any given case.

South Africa, Vodacom South Africa