Vodafone’s Vodacom deal forges ahead despite legal challenges

South Africa’s telecoms regulator and trade unions have threatened Vodafone’s bid to purchase an additional 15 per cent in mobile operator Vodacom, after the UK operator was forced to face the Independent Communications Authority of South Africa (ICASA) and Congress of SA Trade Unions (COSATU) in court on May 17, just one day before Vodacom was due to be listed on the Johannesburg Stock Exchange.

Vodafone’s takeover of Vodacom may face a bumpy landing

The legal action came as the regulator did a u-turn on May 15 over its initial green light of the ZAR22.5 billion (US$2.2 billion) deal announced in November, which would allow Vodafone to raise its stake in Vodacom to a controlling 65 per cent, up from its original 50/50 share with state-owned fixed-line operator Telkom.

Vodafone’s investment has faced opposition from COSATU and the South African Communist Party, which said the acquisition would threaten jobs and surrender control to a foreign investor. However the High Court in Pretoria dismissed the oppositions’ application and stated the stock exchange listing of Vodacom would go ahead as planned. The unions have urged a public boycott of Vodacom.

The original agreement was subject to approval by 75 per cent of shareholders from Telkom, as well as being conditional upon Vodacom being listed on the Johannesburg Stock Exchange and the remaining 35 per cent of Vodacom Group being demerged by Telkom to its shareholders.