Tuesday, May 19, 2009

High Court Gives Vodacom Green light on JSE Listing

South African mobile network provider, Vodacom, will go ahead with its listing on the Johannesburg Stock Exchange (JSE) this morning, despite weekend efforts by trade unions and regulators to prevent the listing.

The country's largest organized labour movement, the Congress of South African Trade Unions (COSATU) brought an urgent application in the Pretoria High Court attempting to prevent the listing.

Presiding judge John Murphy dismissed the application with cost, effectively giving the transaction the green light.

The completed listing process will see the country's largest fixes line operator, Telkom, sell 15% of its 50% stake in Vodacom to UK based mobile network giant Vodafone for ZAR22,5 billion.

Telkom will further un-bundle its remaining 35% shareholding to its own shareholders in the form of publicly traded Vodacom stock. Vodafone will be the majority shareholder in the newly listed entity, with 65% of the total shareholding.

The country's communication regulator, the Independent Communication Authority of South Africa (ICASA), also had a sudden change of heart just before the weekend, saying that it had concerns over the legality of Vodacom's operating license if a foreign entity became the majority shareholder of the network provider. The move both surprised and concerned many market commentators, as ICASA had previously approved of the deal, and seemed to do an about-turn because of political pressure.

Following the ruling, COSATU spokesperson Patrick Craven said that the trade union organization was not satisfied with the outcome of the case, and that his organization still believed the deal would be detrimental to South Africa, with such unwanted effects as job losses for local communication workers. He further said that COSATU is considering alternative measures, including a possible nationwide boycott of Vodacom by its members.

Meanwhile, speculation exists that COSATU's real reason for attempts to prevent the listing, is some form of retaliation against allies of the country's former president, Thabo Mbeki, as they allegedly stand to make a lot of money from the transaction.

No comments: