Vodacom’s B-BEE deal

VODACOM is revving up transformation in the ICT sector as the company enters into a R17.5bn B-BEE,Picture: GETTY IMAGES

VODACOM is revving up transformation in the ICT sector as the company enters into a R17.5bn B-BEE deal for a 10-year term with its YeboYethu empowerment structure.

YeboYethu is scheduled to unwind as part of a new Vodacom Group BEE transaction. As a result, approximately 82 800 black investors will receive a significant cash dividend payout and acquire a larger shareholding in JSElisted Vodacom Group, providing exposure to Vodacom’s local and international operations, which will enhance the liquidity in the YeboYethu share listed on the JSE BEE board.

In this new BEE transaction, valued at R17.5bn, YeboYethu will continue to partner with the Vodacom Group as its BEE partner. It is the largest BEE transaction in the ICT sector, giving YeboYethu increased involvement as Vodacom Group’s BEE partner.

Post the transaction, YeboYethu would likely become Vodacom Group’s third-largest shareholder. Zarina Bassa, chairman of YeboYethu, yesterday said its board is “unanimously supportive of the transaction as it creates immediate value now for the more than 82 800 black investors through the cash dividend and importantly, an opportunity to reinvest on favourable terms in the Vodacom Group.

“These are exciting times for YeboYethu shareholders as we continue to invest in the next 10 years, building on what we have already achieved over the last 10 years with an increased involvement as Vodacom Group’s BEE partner, in the largest BEE transaction in the ICT sector.”

Commenting on the new BEE transaction, Vodacom Group CEO Shameel Joosub, said: “The circa R17.5bn BEE transaction provides an ideal opportunity for Vodacom to partner with our existing broad-based BEE partners and Vodacom staff in facilitating a further BEE ownership transaction – this time at the Vodacom Group level. “The transaction will sustain Vodacom’s BEE ownership for the next 10 years and underscores our commitment to broad-based empowerment and transforming our equity ownership in order to reflect the demographics of South Africa.”

To the benefit of YeboYethu shareholders, a substantial cash dividend has been paid in the amount of approximately R1.56bn or R67 per share, which is 2.7 times their original investment into the Vodacom BEE deal; Established in 2008, YeboYethu was designed with the express intention of providing true grassroots empowerment.

YeboYethu issued 14.4 million YeboYethu ordinary shares at R25 each and as a result of the public offer, approximately 102000 qualifying black investors bought a stake in Vodacom SA. At the time of implementation of the Vodacom SA BEE transaction, valued at R7.5bn, it was one of the largest empowerment schemes in the telecommunications industry, resulting in YeboYethu owning 3.44% of Vodacom SA.

Between February 2014 and July 2016, these shares changed hands on the YeboYethu OTC trading platform and started trading at R55.50 on the JSE’s BEE board on August 11, 2016. YeboYethu shareholders will have the opportunity to vote on and approve the transaction at a general meeting of shareholders, which is expected to be held on August 17.

Ahead of the meeting YeboYethu will conduct various awareness and information campaigns for shareholders. Petrochemicals and energy firm Sasol said last year it would cover costs and pay bank debt related to a share sale from its Inzalo black economic empowerment scheme after the share price slumped, leaving investors unable to fully repay their debts.

-THELMA NGOMA|thelman@afrotone.co.za