Vodacom Group Ltd., the African unit of Vodafone Group Plc, will re-organize its black economic empowerment structure to meet conditions for the 7 billion-rand ($566 million) acquisition of Internet provider Neotel Pty Ltd.
The mobile-phone company is seeking to incorporate Neotel’s black shareholders so they benefit from the Johannesburg-based company’s dividend payouts, according to Chief Executive Officer Shameel Joosub. South African companies are required to be divest shares to black-owned enterprises to make up for economic discrimination during white minority rule.
“In complying with both the Competition Commission and ICASA requirements, we’re going to have to do another deal,” Joosub said in an intverview after the company’s annual general meeting on Thursday, referring to the two main regulators. “We would prefer to do a deal at the Vodacom level.”
The Neotel acquisition was granted provisional approval by South African regulators after more than a year of consideration on the condition that Vodacom doesn’t cut Neotel jobs, invests 10 billion rand in the company within five years and restricts its use of Neotel’s spectrum for two years. Black economic-empowerment groups must also hold 30 percent equity of the license that’s being transferred to Vodacom as part of the deal, worth about 2.1 billion rand of Neotel’s value.
“There are a set of fair but tough obligations attached to the deal,” Joosub said, adding he expects full approval by the year-end. “We intend to grow jobs and the reason for that is because Neotel needs a big capital investment. That level of investment will create more jobs, not less jobs.”
Vodacom shares traded 0.3 percent higher at 136.46 rand as of 4:16 p.m. in Johannesburg, increasing the year’s gain to 6.3 percent. The company has a market value of 203 billion rand.