Vodacom is considering the sale of a R15bn stake, in what would be one of the country’s biggest deals aimed at boosting black participation in the economy, according to two people familiar with the matter.

Vodacom plans to buy back part of the 12.47% stake owned by the government’s pension-fund manager, the Public Investment Corporation, said the people, who asked not to be identified because the deliberations were private. The shareholding could then be listed as a separate entity restricted to black investors, they said.

Negotiations with the PIC were ongoing and an outcome was expected in coming months, said one of people.

"Vodacom is committed to delivering on the ideals of black economic empowerment and continues to explore a variety of options with the primary objective of broad-based inclusivity," a spokesperson said in e-mailed comments, without directly commenting on whether such a transaction was being considered. "Any transaction of this nature will be conducted through a well-governed, highly transparent process."

Replacement programme

The deal would help SA’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% 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 programme in line with the new policy, said one of the people.

Vodacom shares rose 0.6% to R151.95 as of 9.08am in Johannesburg on Thursday, valuing the company at R226bn.

"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.

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 businesspeople, one of which included former senior Vodacom executive Romeo Kumalo.

Vodacom’s new empowerment programme would be double the size of the R7.5bn plan that ends in 2018. 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 programme ends. Cross town rival MTN started a R9.9bn empowerment plan in 2016, which boosted its black ownership to more than 30%.

The ANC has pledged to ensure the country’s black majority secures a bigger stake in the economy as it seeks to claw back support lost after a succession of scandals implicating President Jacob Zuma.

"Radical economic transformation remains at the core of our economic strategy," Zuma said at a rally earlier in January 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."


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