Vodacom Confirms Black Shareholder Plan

Vodacom has finally concluded the details of its broad-based Black Economic Empowerment (BEE) transaction. This follows the companyÃ's announcement of its intention to implement a BEE transaction on 10 March 2008 and the announcement of the preferred strategic partners on 24 April 2008.

Black Economic Empowerment (BEE) is a program launched by the South African government to redress the inequalities of Apartheid by giving previously disadvantaged groups (black Africans, Coloureds and Indians who are SA citizens) economic opportunities previously not available to them. After the end of Apartheid in 1994 and with the advent of majority rule, control of big business in both the public and private sectors still rested primarily in the hands of white individuals. According to Statistics South Africa, Whites comprise just under 10% of the population, meaning that most of the country's economy was controlled by a very small minority. BEE is intended to transform the economy to be representative of the demographic make-up of the country.

The transaction is very broad-based including a public offer to the black public, black groups and Vodacom black business partners as well as participation by VodacomÃ's employees and two broadbased strategic partners, Royal Bafokeng Holdings (RBH) and Thebe Investment Corporation.

The transaction value of R7.5 billion (US$926 million) equates to an effective 6.25% interest in VodacomÃ's South African operations, Vodacom SA. This values Vodacom SA at R120 billion. If the public offer is fully subscribed, the equity contribution by participants will be R900 million.

As previously announced, Vodacom SA staff will participate in 25%, and the strategic black partners 45%, of the BEE transaction. Assuming that the public offer is fully subscribed, the black public will participate in 30% of the BEE transaction. On that basis, ownership in Vodacom SA post the BEE transaction will therefore be black public 1.89%, employees 1.55% and strategic black partners 2.81%. The balance of ownership of 93.75% will continue to be held by Vodacom Group.

RBH is the primary investment vehicle of the Royal Bafokeng Nation, a 300,000 strong broad-based black community in the North West province. Thebe is one of the pioneers of broad-based BEE in South Africa. Its main shareholder, the Batho Batho Trust, is a community based organisation established to promote the social and economic development of black people and women.

Posted to the site on 29th July 2008