Sat Oct 22 13:56:49 SAST 2016

Vodacom deal is a takeover by the UK's Vodafone

By unknown | May 21, 2009 | COMMENTS [ 0 ]

Patrick Craven

Patrick Craven

Cosatu hit the headlines last weekend when, with the Independent Communications Authority of South Africa, it applied for an urgent interdict to stop the listing of Vodacom on the Johannesburg Securities Exchange and the sale of R22,5billion of Telkom shares in Vodacom to British company Vodafone.

We lost the first round but will continue to campaign to reverse the decision.

When Vodacom was established, it was 50percent owned by Vodafone and 50percent by Telkom, which was then a 100percent publicly-owned South African company. This 50percent stake gave Telkom a strategic leverage over Vodacom, a key company in an important sector of our economy.

Telecommunications today is comparable to water, electricity, education and health in its importance to the people and the economy.

Despite Cosatu's strong opposition , the ANC government began to privatise Telkom. But the government still holds a 38percent shareholding and Telkom's 50percent shareholding in Vodacom still gave South Africa a veto stake - until Monday . By selling a 15percent share , Telkom has given the British multinational a 65percent controlling share. Vodacom has become Vodafone's local subsidiary.

South Africa's biggest cellphone operator and a strategic player in our telecommunications sector has been removed from South African control. If there are any serious complaints about prices, quality of service, workers' working conditions or retrenchments, they will have to be referred to Vodafone's London headquarters.

Like any other capitalist company, they will be interested in cutting costs and maximising profits. Whatever assurances they may give now, the interests of South African workers and consumers will inevitably come a poor second to the interests of British shareholders, and too often the quickest way to cut costs is to retrench workers.

Two arguments have been advanced in support of the deal. It is said that the deal will free Telkom to enter the cellphone market and thus create more competition and lower prices. But Telkom and Vodafone have, through Vodacom, done nothing to bring down exceptionally high cellphone charges. Why would they now that they are operating separately? The cosy cartel with MTN and Cell C has made massive profits for all of them and they will want to keep prices as high as possible for as long as possible.

Secondly, it is said that we should all welcome the foreign investment. Cosatu is not opposed to foreign investment, but not at any price. We will not accept investment at the cost of losing control of key strategic companies to overseas multinationals.

We also have to ask where that money is going? We welcome investment that leads to new jobs, better service delivery and improvements in national infrastructure. But these billions are just going to line the pockets of Telkom shareholders.

The argument that such profits will eventually "filter down" has been totally discredited. The majority of South Africans will not see a cent of the money and there is no guarantee that Telkom shareholders will use the money to expand or improve services or to cut tariffs.

Ever since privatisation began, the opposite has happened. As profits have risen, thousands of jobs have been destroyed, service has got worse and Telkom exploits its virtual monopoly position to keep prices among the highest in the world. The sale must be reversed and Telkom must use its stake to turn that also into a company that serves the interests of South Africans.

lCraven is Cosatu's national spokesperson


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