Customers wait for assistance at a store inside the headquarters of Vodacom Group in Johannesburg. South Africa sold its entire stake in Vodafone Group’s African unit for more than $1.9bn, raising funds for the state-owned power utility Eskom Holdings amid a countrywide electricity shortage.

Bloomberg/Johannesburg


South Africa sold its entire stake in Vodafone Group’s African unit for more than 23bn rand ($1.9bn), raising funds for state-owned power utility Eskom Holdings amid a countrywide electricity shortage.
The 13.91% holding in Vodacom Group was sold to the state-owned Public Investment Corp, Africa’s largest money manager, at a 10% discount to the 30-day average price, the National Treasury said in e-mailed statements yesterday. Vodacom shares advanced as much as 4.9% to 145.52 rand, a more than six-week high.
“The sale of the Vodacom stake was the most viable option for ensuring that government was able to swiftly realise the proceeds and inject equity into Eskom to bolster the utility,” the Treasury said.
“The PIC’s offer to government was in line with pricing quoted by other institutions when taking into account the large size of the stake.”
South Africa has worked out a 23bn-rand bailout package for Eskom, which is building new plants to resolve the power shortage in the continent’s most-industrialised nation.
The utility has a 225bn-rand cash-flow shortfall and has been carrying out scheduled blackouts every other day this year as demand exceeds supply from ageing power stations. Vodacom shares traded 3.9% higher at 144.10 rand as of 12:27 p.m. in Johannesburg, valuing the company at 214bn rand.
The stock is up 12% this year, compared with a 4.6% gain on the FTSE/JSE Africa All-Share Index.
While the government isn’t on a “campaign to sell state assets,” the cabinet will conduct a review of corporate investments to determine if it wants to retain them, Finance Minister Nhlanhla Nene told reporters in Pretoria.
“We are on a campaign to make sure that what we have is what the state needs in order to pursue its development agenda but at the same time that we do not hang onto something that is not core to the government’s function,” he said.
South Africa holds a direct stake of just under 40% in fixed-line phone company Telkom. The state also owns shares in companies including Kumba Iron Ore, Sappi and Life Healthcare Group Holdings through the Industrial Development Corp.
Nene has pledged to provide Eskom with financial support in a way that doesn’t undermine the nation’s budget to avoid the risk of a credit-rating downgrade.
The government is seeking to narrow the fiscal shortfall to 2.5% of gross domestic product in the year through March 2018 from an estimated 3.9% this year.