Business

Strong JSE debut for Vodacom

19 May 2009

Mobile operator Vodacom made a strong debut on South Africa's stock exchange on Monday, after the Pretoria High Court rejected a late bid to stop state company Telkom from selling a 15% stake in Vodacom to British mobile giant Vodafone.

More than R100-million in shares were traded in the first hour after Vodacom's market debut, with its total value moving between R88-billion and R93-billion, making it about the 11th biggest company on the JSE by market value.

The listing was part of a R22.5-billion deal with Vodafone which saw the British company's share in Vodacom increase from the 50% it already held to 65%, giving it full control of Vodacom, in one of South Africa's largest recent foreign direct investments.

Telkom has disposed of its remaining 35% holding in Vodacom to its shareholders.

"Vodacom is going ahead with South Africa's largest listing in years this morning, in a move likely to restore international investor confidence that neither political pressure nor union agitation holds decisive sway over the country's business and investment environment," Business Day wrote on Monday.

An urgent court application to halt the deal was made on Friday by the Congress of South African Trade Unions (Cosatu) and the Independent Communications Authority of South Africa (Icasa).

The application was opposed by Telkom, Vodacom, Vodafone and the government, in the form of the Department of Communications.

Cosatu and Icasa were calling for public hearings to decide on the matter, with Cosautu arguing that Telkom's 50% stake in South Africa's biggest cellular operator was a public asset that should not be sold off to a foreign company.

"The Telkom board is confident that this transaction will unlock significant value for shareholders, and will facilitate the transformation of Telkom into a leading converged information and communications technology player on the African continent," Telkom CEO Reuben September said when the deal was announced in November.

"The retained portion of the proceeds from the disposal will be used to accelerate the development of our mobile and data strategies, while also allowing us to selectively expand our geographic presence."

A shareholder's agreement between Vodafone and Telkom had restricted both Telkom and Vodacom, September said, and with that out of the way, Telkom would be able to act independently, no longer be prevented from offering mobile voice services in South Africa or making mobile acquisitions in Africa south of the Equator.

Vodacom, for its part, would be Vodafone's expansion vehicle in sub-Saharan Africa, excluding North Africa, Ghana and Kenya, September added.

SAinfo reporter