SA 'closed for investment'

Johannesburg - Analysts are warning that a decision by Icasa could damage SA's image in the international investment environment.

On Friday the Independent Communications Authority of SA (Icasa) reversed its early decision that Telkom did not need its approval to dispose of its Vodacom shares to the UK's Vodafone. The transaction paved the way for Vodacom to list on the JSE on Monday.

The regulatory body said it had decided to rescind its previous decision and now believed a transaction of this nature should take place in a regulatory environment. Public hearings will take place by mid-June 2009.

Vodacom will now face Icasa and union federation Cosatu in the high court in Pretoria on Sunday. It had been served by an urgent application by Cosatu and Icasa to stop its listing.

In a report headlined "Zuma government halts Vodacom purchase", the UK newspaper Financial Times said foreign investors are watching the new government?s first moves, especially after the appointment of senior trade unionists to economic policymaking positions.

The paper quoted Peter Attard Montalto, emerging market analyst at Nomura, as saying: "The 11th-hour nature of the regulators' decision has added significantly to this nervousness."

The rand took a hit following the Vodacom development and on Friday closed at 8.67 against the dollar, compared to Thursday's New York close at 8.5215.

Some are saying that the debacle is an early indication that the ANC's leftwing alliance could play a much bigger role in economic policy issues in future, reports Sunday newspaper Rapport.

Mike Schüssler, economist of Economists.co.za, says the development is not good for South Africa's image. "It casts a shadow of uncertainty over the regulatory environment."

Schüssler says although not much is known of what happened behind the scenes, it looks as if Icasa is taking the new Zuma government very seriously.

Coronation Fund Managers' Gavin Joubert told the Sunday Times the decision by Icasa sends a strong message that South Africa is closed for investment.

"The message is that SA does not offer a predictable, stable business environment."

ICT analyst Lindsey McDonald told the newspaper the decision could be viewed as meddling.

"To do this late on a Friday before a Monday listing is a show of bad timing. Sceptics could say this is meddling by the new government. It also causes uncertainty."

Analyst Dobek Pater said he was unsure about Icasa's motives. "This is possibly a case of the new government applying pressure to block the deal."

Rapport reports of speculation that labour unions are against the listing because shareholders in the Elephant consortium, a group of empowerment shareholders who are allies of former president Thabo Mbeki, would benefit handsomely from the deal.

- Fin24.com