Vodacom's walk to freedom

By Candice Jones, ITWeb online telecoms editor

SA, 04 Mar 2009

Vodacom expects to be independent of Telkom by 4 May and will list on the Johannesburg Securities Exchange (JSE) the day after.

After 15 years under the contentious joint ownership of UK-based Vodafone and SA's incumbent, Telkom, Vodacom will establish its independence in a proposed timeframe of under two months.

During a conference call last night, Vodacom CEO Pieter Uys explained the process of the coming months, which will start in earnest on 24 March. The complete unbundling of Telkom's shareholding in Vodacom will be completed by 4 May and Vodacom will blow the kudu horn on 5 May.

“While we understand that it's not the best time to be listing on the JSE, we are bound by the agreement. Although we are not listing to raise capital; if we were, it would be far more difficult,” explained Uys.

Step-by-step

The process will see the largest global telecoms business, Vodafone, acquire a total of 65% in Vodacom, paying R22.5 billion for the added 15% it is taking from Telkom. Uys says after debt, the actual amount will be in the region of R20 billion; however, this figure does not include tax.

Half of what Telkom makes on the deal will be shared among its shareholders as a special dividend. According to a financial statement released by Telkom last night, that will come to around R19 per share.

Telkom will then distribute or unbundle the rest of its shareholding to Telkom shareholders, who then become shareholders in Vodacom. Vodacom will then be free to list.

While Telkom shareholders line their pockets, Uys says Vodacom shareholders can also look forward to a sustainable dividend policy, the first of which it hopes to pay out at the end of its first public financial year.

New drivers

The process will also see many changes at executive level; the most prominent is the resignation of current Vodacom board chairman Andrew Mabandla. Peter Moyo will take his place at the board table.

While we understand that it's not the best time to be listing on the JSE, we are bound by the agreement.
Pieter Uys, CEO, Vodacom

Telkom will own a large portion of Vodacom up until the day before it lists, when it expects the new board members to take up the helm. Uys assured the media last night that Telkom has agreed to approve the new board members.

He said Telkom board members have been slowly moving away and currently only has two non-executive members. Some of the Vodafone board members to be fully instated after listing have already been serving in that capacity.

Uys explained the process followed in the appointment of Vodafone members and the replacement of Telkom members is in line with corporate governance guidelines.