How the deal was done
The government recently sold 207 million Vodacom shares to the PIC Daily volume of shares traded 7 000 000
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1/2/2015 The government’s Vodacom shares that were held by the department of telecommunications and postal services were a legacy of the mobile operator’s beginnings as a subsidiary of Telkom and the unbundling of Telkom’s shareholding in 2009.
Though there was nothing particularly strategic about the stake, it had been a cornerstone of the department’s finances for many years. Basically, Vodacom dividends were covering the department’s operating expenses – dwarfing income from licence fees collected through communications regulator Icasa.
The whole premise of the deal was that Eskom’s bailout had to be “deficit neutral”, meaning it should have no impact on the national budget.
The 13.91% stake in Vodacom provided the department with dividends of about R1.7 billion last year and a similar dividend was budgeted for this year. This hole will now have to be plugged.
But the department’s spokesperson, Siya Qoza, said it made little difference, as the dividends were paid through to the central National Revenue Fund despite being accounted for as department of telecommunications and postal services income in national accounts. Treasury spokesperson Phumza Macanda made the same point: the department would still receive its allocation from Treasury. All the same, the Vodacom dividends represent income lost to government.
A similar argument can be made about the conversion of the government’s R60 billion in loans to Eskom into equity. The deal does not increase government’s stake, but eliminates Eskom’s obligation to pay back the money.