CWU meets with Telkom over Vodacom

By Candice Jones, ITWeb online telecoms editor

Johannesburg, 23 Apr 2009

Vodacom seems unconcerned about the possibility of an interdict application lodged by the Communication Workers Union (CWU) this week.

The company says it received the notice of the application to have the sale of Vodacom to Vodafone halted, but is not directly involved. "Vodacom has been cited in this application as the fourth respondent; however, no order is sought against Vodacom and we are cited as an interested party only," says Vodacom chief communications officer Dot Field.

Last Friday, CWU lodged an urgent application in the Pretoria High Court to prevent Telkom from unbundling its stake in Vodacom halted. The hearing was set for Tuesday this week, but was postponed at the last minute, giving Telkom time to regroup.

The union has been vocal about its opposition to the merger and the interdict is no surprise to most industry watchers.

The CWU is adamant the sale should never have been considered, since Vodacom is a national asset and should not be placed in the hands of a foreign business. The union also maintains it was never consulted on the process, despite agreements in place that required Telkom and Vodafone to do so.

“We had no other option but to use the law to force all parties to properly consult CWU, as we have members in both Telkom and Vodacom,” says the union's secretary general, Gallant Roberts.

Talks under way

Telkom has agreed to meet with the CWU's leadership today, although it is unlikely the union will have any sway over Telkom's decision. In its legal documentation, Telkom argues that “the transaction is irreversible”.

It also says it was under no obligation to consult with the union, since there are no implications for labour. CWU believes there are labour-related issues, all of which make up the crux of its interdict application.

Roberts explains there are concerns around the job security of its members both within Telkom and within a Vodafone-owned Vodacom. Industry watchers are not sure the CWU will be able to halt the process. However, Roberts believes the union has a strong case.

Final destination

Unless Telkom manages to sway the union during today's discussions, the actual unbundling could face another delay. The new court date is set for 30 April, just two weeks before the process is expected to be wrapped up.

Vodacom has already had to push back its listing to 18 May, because all the relevant approvals and conditions were two weeks late. Neither company will be pleased with this kind of delay, because both have been making strategy decisions that require the divorce.

Telkom's latest decision is a deal with AT&T that will see it competing in the African space, and Vodacom has plans to aggressively take on the same market.

The current contractual agreement between Vodacom and Telkom means neither can effectively compete in Africa while they are joined.