In an effort to boost its black economic empowerment (BEE) credentials, Nokia Siemens Networks has sold a 26% stake in its South African holding entity, Nokia Siemens Networks Holdings RSA, to the Sekunjalo Group and Africom.
This transaction comes seven months after Nokia and Siemens decided to merge their network services.
In April, a similar BEE transaction was announced by Siemens that gave Sekunjalo`s wholly-owned subsidiary Linacre Investments and Business Venture Investments, a subsidiary of Africom (New Africa Millennium Telecommunications), a 30% stake in the local branch of the German electronics giant.
Linda Khumalo, Nokia Siemens Networks sub-regional head, says: "This is quite unique within the company. As far as I know, no similar transaction has been entered into anywhere else where the company operates."
The deal means Sekunjalo and Africom will each receive 13% of Nokia Siemens Networks Holdings RSA, which owns 60% of the operating entity Nokia Siemens Networks SA. South African electronics group Reunert, which owns 40% of the operating entity, in turn contributes its own 9.5% BEE shareholding to the equation.
According to Nokia Siemens Networks, this gives the local holding company an effective 31.53% BEE stake, if the shareholdings by the pension funds are discounted.
Telkom`s BEE demands
The value of the agreement has not been disclosed and neither has a time frame. Rand Merchant Bank is financing the Sekunjalo and Africom obligations.
Siemens has traditionally been one of the big three suppliers, along with Alcatel Lucent and Grintek, to Telkom. The incumbent telecommunications operator instituted strict BEE rules for its suppliers over the past five years.
In July, media reports indicated Telkom had asked its major suppliers to jack up their BEE credentials. However, this was neither confirmed nor denied by it or its suppliers.
Khumalo says his company`s deal was driven by Telkom`s requirements as well as requests from other ICT players and industrial sectors, which are all trying to meet the Department of Trade and Industry`s BEE codes of good practice.
Nokia Siemens Networks is a major supplier to government`s Broadband Infraco, cellular operators Cell C and Vodacom, and second national operator Neotel.
Khumalo says this deal is the first of two phases in Nokia Siemens Networks` BEE strategy. The second phase will see it increase its BEE shareholding to that of a level six contributor from the current level four. Sekunjalo and Africom will also become more involved at the operating level.
He says black people will become more involved in the company and 48% of its 1 000 staff members come from previously-disadvantaged backgrounds.
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