Double empowerment at Vodacom

Johannesburg, 16 Mar 2007

Vodacom's 4 300 employees will benefit from a R7.5 billion black economic empowerment (BEE) deal, says the cellular operator.

The deal was discussed at Wednesday's board meeting, says Dot Field, chief communications officer. The company's staff will share in a quarter of the deal, which will see between 7.5% and 10% of the South African entity being sold to empowerment partners.

"The criteria... takes into account the requirement that such a BEE grouping should represent Vodacom staff, broad-based representative groups of previously-disadvantaged South Africans, as well as individuals whose participation would constitute a strategic 'value-add' to the Vodacom group," says CEO Alan Knott-Craig.

He previously said the deal would come in at around R7.5 billion, which is in line with the ICT charter. The charter proposes a cut-off value of either 30% of equity, or R7.5 billion, whichever is the larger amount.

Irnest Kaplan, MD of Kaplan Equity Analysts, says Vodacom's value in the market ranges between R70 billion and R100 billion. Assuming the stake is R7.5 billion, this places the BEE stake at between 7.5% and 10%.

Craig Forbes, a transactor in corporate finance at RMB, previously said the deal is being structured at the South African operating level. "The intention at the moment is that the transaction is done at Vodacom SA level."

Forbes says the exact percentage and rand value of the deal is still being worked out. RMB is evaluating the company's worth, and the final value and percentage will only be known when this has been finalised with the empowerment partners. In addition, the final value has to meet with shareholder approval.

A shortlist of parties is expected in the next two months. Analysts say a deal of this size would probably require several partners and quite a few financial partners.