THE BOTTOM LINE
Vodacom’s new BEE deal is nice, but does it do enough?
Giving more staff a stake makes sense, but the scheme falls short of reaching 30% empowerment threshold
Vodacom’s revised black economic empowerment (BEE) deal makes a lot of sense and seems to be in the best interests of all parties. It consolidates the black investor base under a single vehicle, JSE-listed YeboYethu, and gives those investors exposure to the group’s fortunes, rather than just the domestic business. And while the first scheme has proved to be a huge success, the replacement deal might not go far enough.Even though the deal will cost Vodacom about R4.2-billion to implement, it will only raise the group’s black ownership from 17% to 20%. A worst-case scenario for South Africa’s biggest mobile operator would be for regulators to go with an initial proposal that operators must be 30% black-owned to get access to new spectrum. Vodacom and its peers desperately need more spectrum to roll out their services faster and more cost effectively.
While it does seem as though regulators are leaning towards requiring a level four BEE rating rather than 30% black ownership, the latter proposal is certainly not completely off the table, especially considering that in other sectors, such as construction, the requirements are even tougher.
If the 30% hurdle rate materialises, MTN will hold the upper hand. In 2016, MTN said its Zakhele Futhi BEE scheme would ensure that it had at least 30% black ownership.
So to avoid being sidelined, there is a possibility that Vodacom will have to fork out even more in the future to enlarge its BEE scheme.
Meanwhile, the company’s new employee share scheme is no doubt a great idea. Giving staff a stake in the business is arguably the best way to align their interests with senior management and to get everyone pulling in the same direction.