Telco offloads 5.2% stake in South African operator, reducing its holding to 64.5% and raising free float above 20% threshold

Vodafone on Wednesday announced that it has sold a 5.2% stake in Vodacom to institutional investors, thereby meeting the minimum free float requirements of the Johannesburg Stock Exchange (JSE).

The telco said it had placed 90 million shares in the South African business at 165 rand (€11) each, putting the total sale at ZAR14.85 billion (€970 million).

The transaction reduces its stake in Vodacom to 64.5%.

The move came about as a result of Vodafone’s decision to transfer a 35% indirect stake in Kenya’s Safaricom to Vodacom in May. As part of the deal, Vodacom issued new shares and Vodafone increased its stake in the South African unit to 69.7% from 65%.

The transaction left Vodacom in contravention of stock market rules, its free float having fallen to 18%, while JSE listing rules require a minimum 20% free float.

When the companies completed the deal a month ago, Vodafone noted that it had agreed a two-year exemption from that rule and pledged to sell down its Vodacom stake.

In addition to meeting JSE requirements, the sale returns Vodafone’s stake in Vodacom to a level similar to its position prior to the Safaricom deal, the telco said in a stock exchange announcement on Wednesday.

"Vodafone remains committed to Vodacom and intends to retain a controlling majority shareholding in Vodacom for the long-term," it added.