Multichoice briefing on its Black Economic Empowerment Deal & Postal Services Amendment Bill [B22-2006] continuation of delibera

COMMUNICATIONS PORTFOLIO COMMITTEE
11 October 2006
MULTICHOICE BRIEFING ON ITS BLACK ECONOMIC EMPOWERMENT DEAL & POSTAL SERVICES AMENDMENT BILL [B22-2006] CONTINUATION OF DELIBERATIONS

Acting Chairperson: Mr G Oliphant (ANC)

Documents handed out:
Multichoice Presentation on Black Economic Empowerment Deal
Postal Services Amendment Bill [B22-2006]

SUMMARY
The committee received a brief presentation from Multichoice on its new Black Economic Empowerment Scheme. The deal was broad based and only qualifying black groups and individuals could participate. Offers were open from 29 September to 27 October, and the deal had been widely publicized. A new company had been created for the deal. Dividends would be payable from the first year, but the shares could not be traded for a five-year period. The Post Office was being used as a distribution partner. Members raised questions on who could purchase shares, whether the offer was discriminatory, the impact of convergence on the deals, and the method of purchasing the shares through the Post Office. It was noted that R10 million had already been invested.

The Committee continued its deliberations on the Postal Services Amendment Bill. Questions were raised on the definition of “exclusive service”, the reference to the “ICT sector” and the powers of the Minister. The Department of Communications reported that it could amend the wording in relation to services, and it was agreed that a draft would be prepared and circulated to members for further consideration.

MINUTES
Briefing by Multichoice on the new Black Economic Empowerment deal
Mr Nolo Letele, Chief Executive Officer, Multichoice, gave the committee a brief presentation on the company’s new Black Economic Empowerment Deal. Multichoice provided premium television entertainment through the DSTV bouquet, offering 70 video and 60 audio channels. In 1995 the first digital satellite service was launched outside the USA. In 2002 interactive television was launched and in 2003 the first dual view decoder was launched. In November 2005 the DSTV PVR decoder was launched. In 2006 the Disney channel was launched. Multichoice was committed to South Africa and to transformation. The new share scheme formed part of Multichoice’s empowerment strategy, which was aligned to the Department of Trade and Industry (dti) codes. The deal would be broad based. Only qualifying black groups and black individuals could participate in the deal. The deal opened on 29 September 2006 and would end on 27 October 2006. All forms of media had been used to promote the BEE deal. Phutuma Nathi Investments had been created for the BEE deal and would have 15% black ownership. The stakeholders of the company would be able to vote at the AGM of the investment company. The intention was to pay out a dividend from the first year. Participants were required to purchase a minimum of 20 shares for R200. The maximum amount of shares available for purchase was 4.5 million shares at R45 million. The investment was for five years and the shares could not be sold during that five year period, but would be able to be traded after that. Only black qualifying individuals or companies would be allowed to purchase the shares. The Post Office had been selected as the distribution partner for this transaction, as it had more than 2 800 offices nationally. The Post Office would make the prospectus and application forms available. Road shows are been conducted throughout the country.

Discussion
Mr R Pieterse (ANC) said that he was pleased that the Post Office had been chosen as a partner in the transaction. He enquired if historically disadvantaged women would also be considered for the deal. He wanted to know if he, as a member of parliament, would be able to purchase shares in the company.

Ms D Smuts (DA) felt that the question that Mr Pieterse was asking was an ethical one. She commented that when Telkom sold 15% of its shares most had been purchased by already well-connected people. She was pleased that this scheme was broad based. She wanted to know if the Multichoice had received any complaints about the deal being aimed at black people, and if this was not discriminating against other races.

Mr N Letele replied that Multichoice was mindful that the shares should not be purchased by the usual share traders. Should Multichoice be oversubscribed there was a selection process in place. A company which was 100% black owned would receive preference, as well as historically disadvantaged people and those with disabilities.

The Acting Chairperson replied that Mutichoice’s criterion did not exclude Mr Pieterse from buying shares, but the ethics arising from the question would be debated at another time.

Mr R Mohlalonga (ANC) enquired how Multichoice had read the market with regards to convergence, and further asked how M-Net and Supersport would fit into the picture.

Mr N Letele replied that the deal was a Multichoice scheme. The financial statements had been included in the prospectus, which reflected the overall view of the company. Any investment that was entered into was a risk. However Multichoice were mindful that the black middle class was rapidly growing.

An official from the Post Office commented that they had already collected R10 million by way of sale of shares.

Ms S Vos (IFP) asked how exactly the shares would be purchased through the Post Office.

The official from the Post Office replied that the ID, a bank account and the money were required. The Post Office would open an account for anyone who did not have a bank account. It would also ensure that there was full compliance with the Financial Intelligence Centre Act (FICA) regulations.

Deliberations on Postal Services Amendment Bill
The Acting Chairperson asked members if there were any substantive issues that they wanted to raise on the Bill.

Ms D Smuts (DA) requested clarity on what an exclusive service was, as defined as in the Bill. She also suggested that the words “ICT sector” be replaced with “Postal Services”.

The Acting Chairperson enquired if both ICT sector and Postal Services could not be included in the Bill. He commented that the ANC was concerned to ensure that the Minister had sufficient powers, whereas the DA was concerned to ensure that the Minister did not have too much power. 

Mr Willie Vukela, Department of Communications, replied that the industry was moving towards a convergence environment. No new powers were given to the Minister in this Bill. The reference to the ICT sector was included to cater for the situation where there would not be a separately defined postal service.

Mr A Wiltz, Director: Legal, Department of Communications, replied that the Department had looked at the definition of essential services. It was found that these were related more to emergency services, which, if hindered, could interfere with health and life. The Post Office could be described as a hub and serve as a medium of connectivity. An option would be to remove the word “essential”, leaving the reference to “services” only. This could then be linked with Section 1(c).

The Acting Chairperson asked the drafters to include the proposed amendments in the proper format, and distribute them to members for further deliberation.

The meeting was adjourned.