VODACOM won legal permission to list on the JSE last week — despite union protests — to avoid destabilising the stock market, devaluing the rand and inflicting severe injury to the reputation of the government, says the judge who granted the go-ahead.
If the Congress of South African Trade Unions (Cosatu) had been allowed to prevent the listing, it could have triggered a contagious sell-off of shares in other sectors of the economy as foreign investors lost their faith in SA as a sound investment destination.
Those are the among the reasons North Gauteng High Court Judge John Murphy dismissed an application by Cosatu to halt the listing, according to his written judgment published yesterday.
Cosatu was supported in its disruptive action by the Independent Communications Authority of SA (Icasa) which decided belatedly it should have held public hearings.
Murphy’s dismissal of their objections after an emergency court case on a Sunday let Telkom complete a deal to sell 15% of Vodacom to the British operator Vodacom for R20,95bn and list its remaining 35% on the JSE.
Although political pressure from the new, more left-wing government was said to have fuelled Cosatu’s action, the government’s official stance was to oppose Cosatu’s plea for an interdict and the Department of Communications said the government had given its commitment to supporting the deal.
In his verdict, Murphy said listing Vodacom was part of a series of transactions that the companies claimed could not be unscrambled “without severely injuring the financial standing and reputations of the respondents and the government”.
They had proceeded in good faith, based on an earlier decision by Icasa that it did not need to approve of the unbundling. Public anticipation of the listing had created a boom in the volume of Telkom shares being traded, which were changing hands nine times faster than usual. “An interdict will therefore have adverse implications for share values, and presumably there is the risk of contagion running through to other areas in the market,” Murphy said.
Vodafone had also imported foreign currency worth R20,95bn to fund the deal, so blocking it would probably have an unwelcome effect on the exchange rate. Finally there was a concern that halting the deal would hurt the regulatory environment and damage SA’s reputation as an investment destination.
South Africa: Cosatu's Vodacom Plea 'Risk For Rand' - Judge