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Vodacom YeboYethu: Thousands of shareholders get ready to trade from February

By Jackie Cameron

 

About 2 500 people are set to trade in Vodacom’s black economic empowerment shares when Over The Counter (OTC) buying and selling in YeboYethu opens in the first week of February.mainpic_home

YeboYethu shares were offered to black investors in 2008 at R25/share as part of Vodacom SA’s broad-based Black Economic Empowerment (BEE) strategy to redistribute wealth to previously disadvantaged South Africans.

Shareholders were prohibited from trading in the first five years after the original issue of shares, which were intended as a long-term investment. YeboYethu shareholders have received more than R4 in dividends per share since 2009.

The launch of OTC trade in YeboYethu was delayed last year while formal approvals were finalised with the regulatory Financial Services Board (FSB), chairman Zarina Bassa told shareholders in the company’s 2013 annual report.

YeboYethu trading is finally ready to go live on 3 February and will be open from 9am to 9pm, Monday to Friday.

The only asset YeboYethu has is a 3.44% stake in telecommunications giant Vodacom SA, which has the most cellphone customers in South Africa although it has been losing ground over the past year to competitors.

This stake might sound small but it is worth almost R1bn, according to interim financial statements released in September. At that time, YeboYethu valued shares at about R44 each, which is not far off double the price paid when they were issued.

Analysts are expected to produce reports soon, setting out their expectations for the YeboYethu share price.

The success of YeboYethu is linked to how well Vodacom SA performs, though not the entire Vodacom group because YeboYethu does not own shares in the wider international organisation.

No-one can say with certainty what YeboYethu shares will trade at, with the price being decided by buyers and sellers from 3 February.

Etienne Nel, managing director of OTC share trading platform Equity Express, says: “The share price will be set by the market on the day of listing.

“This is unlike a JSE listing, which would entail a company having a prospectus and issuing shares at a specific value – with shares tending to trade quite closely around that price.”

Nel says that the usual pattern with BEE OTC shares is that there is generally a “frenzy of selling in the first month and it then quietens down quite dramatically”.

BEE OTC share prices can bounce around quite a bit, with some shareholders taking close to what they paid for the shares and essentially breaking even, he notes.

For example, he says, Welkom Yizani – Media24’s BEE OTC stock – started trading around R12/share, ran up to R20/share in the first day and then dropped to R10/share.

Pricing is not always linked to the value of the underlying assets, says Nel, noting that there is much selling just before Christmas when people want to free up cash for presents and holidays.

Of the 102 000 YeboYethu shareholders, about 2 500 have signed up to trade when the online platform opens on 3 February, says Nel. About 500 of these investors do not yet have YeboYethu shares, which suggests they are getting ready to snap them up.

Only black South Africans and entities owned by black South Africans – including Indian and so-called coloured citizens – are allowed to buy and sell YeboYethu shares.

Nel points out that the BEE-related restrictions, and other trading rules, vary between OTC share issuers and that the BEE credentials of investors have to be verified before the stocks can be bought.          

Short-selling – selling shares you do not own with a view to paying less for them later when the price drops – of YeboYethu is not permitted.

OTC share exchange platforms are not as tightly regulated by the FSB as the public stock exchange in Johannesburg.

Less regulation means less red-tape associated with investing in unlisted securities. The flip side of this is that there is no state body checking to make sure that all facets of the administration are as low-risk as possible.

You don’t have to buy and sell Vodacom YeboYethu shares through the OTC exchange’s internet service. You can trade through the call centre (011 321 5563 or, toll-free from a Vodacom cellphone, 082 241 0001).

You can also deal privately, however you are more likely to get an indication of the fair market value of shares if you opt for the OTC platform.

Buyers and sellers are matched through the internet-based system and trades confirmed through SMSs and/or emails.

BEE OTC prices are not widely available. They are published on  issuer websites and closing prices of YeboYethu will appear on Biznews.com regularly.

Later this week, we’ll also publish more on the practical steps of how to trade YeboYethu shares and give you other information to help you decide whether you should invest in YeboYethu shares.