Lesley Stones
10 October 2008
Johannesburg — SA's largest cellular operator, Vodacom, will soon be under British ownership, with the government agreeing that Telkom should divest from the business.
Vodacom is 50% owned by the UK's Vodafone and 50% by Telkom. A deal to end that unworkable joint ownership has been negotiated for months, and a breakthrough was reached last night with Telkom agreeing to sell a 15% stake to Vodafone for R22,5bn.
Telkom will then distribute the other 35% to its own shareholders, which include the government with a 39% stake in Telkom. They will be gaining shares in a listed entity, as Vodacom will then be listed on the JSE.
Vodafone's cash payment will be reduced slightly as a portion of the debt within Vodacom -- estimated at R5bn -- will be deducted from the purchase price.
An analyst said it had probably been "touch and go" as to whether the government would have agreed to let a prestigious and profitable local company be placed under the control of a foreign entity.
However, the deal was good for shareholders, he said, and that included the government itself. At the moment Telkom shareholders own the fixed-line business and 50% of Vodacom. After the deal they will still own the fixed-line business, will hold 35% of Vodacom, and will pocket a substantial amount of cash. The analyst expected Vodafone to pay about R21,75bn once 15% of the debt was deducted.
"We don't know yet how much cash will be paid out. Tel-kom is not going to keep that R22bn so it will pay it as a special dividend to shareholders."
The deal is subject to conditions including the negotiation of final transaction documents and shareholder and regulatory approvals. But the biggest obstacle has already been cleared, with the government and Telkom's board giving the go-ahead.
Originally, Vodafone wanted to buy a 12,5% stake, and has not clarified why that was bumped up to 15%. Vodafone did not want to buy Vodacom in its entirety, partly as it would have had to relinquish some of the shares for a black empowerment deal that is now under way. Once it holds the majority stake of 65%, it can shape Vodacom's future without having to buy all of it.
Vodacom is the largest cellular operator in SA, with 25-million users, and has operations in the Democratic Republic of Congo, Lesotho, Mozambique and Tanzania.
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