How the deal was done

CityPress - - Business - – Dewald van Rens­burg

The gov­ern­ment re­cently sold 207 mil­lion Vo­da­com shares to the PIC Daily vol­ume of shares traded 7 000 000

6 000 000

5 000 000

4 000 000

3 000 000

2 000 000

1 000 000

0

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.

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