Vodacom cuts off Ngcuka

Simpiwe Piliso, Sunday Times Business Times, 2 March 2008

Consortium’s R7.5bn bid fails as shareholders connect with new political heavyweights

Political in-fighting has scuppered one of the country’s biggest empowerment deals as heavyweights in the ruling ANC clash for control of Vodacom’s R7.5-billion BEE transaction.

Bulelani Ngcuka — husband of Deputy President Phumzile Mlambo-Ngcuka — has been dumped by his business partners, who are worried that his close ties to the present government will count against them in their bid to win the deal.

Ngcuka is also unpopular with the ANC’s new regime because, as a former head of the National Prosecuting Authority, he was instrumental in paving the way for new ANC president, Jacob Zuma, to be investigated for corruption related to the multibillion-rand arms deal.

Until recently, Ngcuka’s consortium was one of the front-runners to secure the empowerment stake in Vodacom.

But the new ANC leadership, under treasurer general Mathews Phosa, has now made it clear that the deal will not happen if Ngcuka tries to cash in on it. Last week, the Sunday Times revealed that Phosa has been looking closely at empowerment and other business deals involving allies of President Thabo Mbeki, who was ejected from the leadership of the ANC in December last year.

By October, a cluster of consortiums — named Amandla Omoya — which included Ngcuka, former Mbeki political adviser Moss Ngoasheng and former ANC NEC member Saki Macozoma, was set to snap -up the empowerment stake in the country’s biggest cellular network company, valued at between R90- billion and R100-billion. But the official announcement of the winning bidders was never made and was instead postponed indefinitely by Vodacom.

Business Times has established that the deal is on hold because Vodacom’s shareholders are concerned about the change of leadership in the ANC — and are desperate to maintain good relations with the new powers that be.

UK-based Vodafone, which owns a 50% stake in Vodacom, dispatched the company’s governance director, Bob Collymore, to a fundraiser on the eve of the opening of parliament in Cape Town last month to build relations with the new ANC leadership.

And Amandla Omoya has now splintered. One partner, the former head of Parliament’s communications committee and regulatory affairs at Telkom, Nkenke Kekana, has ditched Ngcuka “due to political pressure” and opted to go solo in his bid for the multibillion-rand deal.

Kekana saw the writing on the wall and decided to consult ANC deputy president Kgalema Motlanthe on who he should rope in as new partners.

Former Eskom chairman Reuel Khoza and businesswoman Anna Mokgokong, who were part of Amandla Omoya, have also opted to go their own way on the deal.

  • Vodafone SA’s governance director Bob Collymore was present at an ANC fundraiser, the night before opening of parliament in Cape Town last month to negotiate and build relations with the new ANC leadership;
  • Nat Kekana, a former chairman of the parliamentary portfolio committee on communications, ditched Ngcuka as a partner in Amandla Omoya and instead consulted ANC deputy president Kgalema Motlanthe; and
  • other partners who have deserted Ngcuka include consortiums headed by Reuel Khoza and Anna Mokgokong.

On Friday Ngcuka declined to discuss the ructions in the consortium, saying he was bound by a confidentiality agreement and, as such, could not comment on progress or lack thereof on the deal.

Kekana, whose own consortium is known as Mowana Five Mile, also declined to comment on the details of his bid. On Friday he told Business Times: “I can’t really talk about the deal,” adding that all bidders had signed confidentiality agreements.

He said he was not part of Amandla Omoya — the initial cluster of consortiums with which Ngcuka was associated.

Meanwhile, Ngcuka, who owns a 35% stake in Sail, which does events promotion for Vodacom and Telkom, also declined to talk about whether there were moves to sideline him from the one of the biggest deals in his four years as an empowerment player.

Vodacom spokesman Nicolene Visser confirmed that changes in the structures of some of the consortiums had delayed the awarding of the empowerment deal.

She would not elaborate but said that delays were also a result of new directives from Vodacom’s shareholders.

Asked about the collapse of Amandla Omoya, Visser said: “At this stage in the process Vodacom cannot comment on bids.”

According to the Caird Group, an empowerment consultancy, Vodacom’s executives could have intentionally delayed the deal and waited for the outcome of the ANC conference.

Director Paul Janisch said companies view it as necessary to have a relationship with the government of the day as “these relationships improve a company’s chances to either influence government policy or secure government business”.

“If you consider that government is the single biggest corporate in South Africa that generates about 40% of the economy’s total expenditure, it makes sense that companies want a slice of that pie.”

Referring to empowerment businessmen who were not in favour with the new ANC leadership, Janisch said: “Now if those people no longer have the necessary relationships in the new government then companies will be loath to include them in their shareholding structures.”

Although Business Times on Friday established that Vodafone chairman Sir John Bond had requested a meeting with the ANC leadership, his spokesman Bobby Leach denied the claim.

“I would not normally comment on this … but our chairman has no plans to travel to South Africa and has not asked for a meeting with the ANC,” he said.

The Vodacom empowerment deal is significant as it is bound to impact on Telkom’s sale of its disposal of a 50% stake in Vodacom, worth about R60-billion.

But it has been established that another bidder has emerged to take on the Saudi Oger Group, which has indicated that it wants to buy Telkom’s stake in Vodacom.


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