Court rules in favour of Vodacom

The North Gauteng High Court in Pretoria yesterday ruled in favour of Vodacom, Telkom and Vodafone as well as the Department of Communications, which joined the list of those opposing the application.

The listing follows Telkom's sale of 15% of Vodacom to UK telecommunications giant Vodafone for R22.5-billion.

The markets were rocked on Friday when Icasa, which had said on 15 April that its permission was not necessary for the deal to go through, changed its mind and rescinded its approval.

The rand fell 3% on the news.

Vodacom has spent more than R200-million preparing for the listing and is now valued at R150-billion, which means it is the seventh-biggest company on the JSE.

In his summation, Judge John Murphy said that the matter was of “considerable national importance” and that he had heard submissions from seven senior counsel representing Telkom, the Minister of Communications, Vodafone Group, Vodafone Holdings, Vodafone Group Pty Limited and Vodacom Pty Ltd.

“The application for an urgent interim interdict restraining the respondents from taking further steps is dismissed with costs,” he said.

Telkom's advocate, Cassie Badenhorst, questioned Cosatu's and Icasa's motives, saying: “We submit that the matter is not urgent and that there is some other agenda. From April 15 to May 16 they were twiddling their thumbs.”

Cosatu spokesman Patrick Craven said the union federation was “extremely disappointed”.

“Disappointed not just on behalf of ourselves, but for the people of South Africa who do not want a South African company to fall under the control of a British company without them having an opportunity to have a say in the matter,” Craven said. “It is a victory for money. The judge concluded that Cosatu had a strong case, but the damage to the people who stood to lose money [if the deal was halted] was greater than the loss to Cosatu.”

He added: “We will continue to oppose the deal by all legal means, including our call for a national boycott of Vodacom.”

The SA Communist Party has backed Cosatu's call for a boycott.

Vodacom spokeswoman Dot Field said: “We welcome the judgment and we look forward to listing on the JSE [today] .”

Icasa and Cosatu went to court yesterday because they wanted public hearings to be held into Vodacom's listing.

35% of Telkom's R22-billion sale of Vodacom shares was set to be transferred to shareholders.

In Judge Murphy's summation, he said that, initially, Icasa told Vodacom it did not need its approval to go ahead with the transaction.

“Then they changed their minds after Vodacom had concluded agreements [and now the regulator says that a] transaction of this nature should take place after an approval process which includes public participation or public hearings in June this year.

“The respondents stuck to their guns that no approval was required and the matter only became urgent after Icasa changed its mind,” he said.

Murphy said Vodacom and the other respondents had “proceeded in good faith after a clear indication from Icasa”.

“Anticipation of the listing led to a significant upsurge in Telkom shares and government was concerned about the country's reputation as an investor destination,” he said.

The judge ruled in favour of the respondents and said he would not issue the interdict sought by Cosatu and Icasa, who would also have to pay the costs of counsel. The minister of communications did not file papers but supported Vodacom's application.

Senior counsel Fanie Cilliers, representing the government, said that they were at court to show support and were committed to seeing the listing through.

“In this agreement in which government is directly involved, Vodafone agreed to give an undertaking based on the government's support for the transaction.

“Government had signed contractual agreements to see that the share listing goes forward,” Cilliers said.

Cosatu said it joined the application by Icasa to protect the “public interest” in an affidavit filed by Cosatu secretary-general Zwelinzima Vavi.

“In the interest of transparency, Icasa finds it appropriate that a public process be followed to allow all interested parties to be heard,” Murphy said, adding that he will hand down his full judgment “in the course of time” and give reasons for his decision later.

Source: The Times

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