Another bizarre episode plays out in Sekunjalo-land

Perhaps nothing from the group that brought South Africans news of a biologically impossible decuplet-birth should surprise us. That said, last week’s announcement by Sekunjalo subsidiary African Equity Empowerment Investments (AEEI) that BT Group was not entitled to claim back the 30% stake in BT South Africa held by AEEI was a little puzzling.

Presumably, BT is also a little puzzled by the announcement.

The battle over who actually owns the stake, which began early this month, looks set to play out for some time with AEEI advising shareholders last Thursday to continue exercising caution “until further announcements in respect of the BT call option are made”.

The close business ties between BT South Africa and Iqbal Survé’s Sekunjalo Group date back to 2008 when Sekunjalo Investment (subsequently renamed AEEI) became BT’s South African BEE partner. The 30% stake was understood to be a significant money-spinner for Sekunjalo Group, so much so that after its controversial December 2017 listing Ayo – another offshoot of Sekunjalo – “acquired” the stake for R990-million.

Parliamentary briefing

The R990-million was a little under a quarter of the R4.3-billion the Public Investment Corp (PIC) had pumped into Ayo at the time of the listing.

Whether or not it was Sekunjalo’s statement, made during a presentation to parliament earlier this year, that Ayo was the proud owner of the 30% stake in BT South Africa that irked BT is unclear. It wasn’t the first time Ayo had stated this, and it wasn’t the first time BT had indicated that it opposed it.

Last week, a BT spokeswoman would only tell TechCentral: “There were factually inaccurate statements made by the Sekunjalo Group to parliament’s standing committee on finance. We were not aware, nor in agreement with, the assumptions made in the pre-listing statement conditions of Ayo Technology Solutions that referred to BT South Africa. This has left us with no other option but to correct the record and terminate the relationship with Sekunjalo.”

BT is adamant the transfer to Ayo never took place and earlier this month said: “We have initiated the termination process with the Sekunjalo Group in line with the shareholder agreement in place.”

“Oh no you don’t,” was essentially AEEI’s response at that stage, not before we check whether the terms of the agreement with BT have been breached. Apparently, the agreement allows BT to repurchase the shares “in the event of an act or omission which is not remedied within 60 days”.

Two weeks later — last Thursday, 17 June — AEEI informed BT that the call option “is not capable of being exercised” by BT. We have yet to hear what BT has to say about AEEI’s latest statement, but it is unlikely to agree.

And so, as another bizarre episode plays out in Sekunjalo-land, we are prompted to wonder how Survé’s hugely profitable and long-term relationship with Siemens is surviving.

• This article was originally published on Moneyweb and is used here with permission