Vodacom, the mobile operator lurching from one public-relations crisis to another, saw its shares dip to a five-year low on Monday.
The stock closed 3.13% lower at R116.16 on the day — the worst level since February 2014.
The sell-off was triggered by a disappointing trading update on January 24, though the company’s woes have been compounded by reputational damage.
In December, Vodacom was targeted by EFF protesters after the party’s leaders were depicted by Corruption Watch chair Mavuso Msimang as “abusers of democracy” during the Vodacom Journalist of the Year awards ceremony.
EFF members then vandalised Vodacom stores before the network operator and the party called a truce — much to the horror of some EFF opponents.
Less than two months later, Vodacom is taking another hit to its reputation. This time, members of the ruling party in Gauteng are upset at the amount Vodacom wants to pay the man behind the Please Call Me service.
The operator reportedly settled on an amount of R49m for Nkosana Makate, though some are calling for it to fork over a staggering R70bn.
Calls for a boycott of Vodacom’s products, and the events it sponsors, have come at a tough time for the group.
On January 24, Vodacom shocked the market when it said service revenues in SA declined 0.9% in the quarter ended December as data revenue growth ground to a halt.
That led analysts from Investec and New Street Research to downgrade their recommendations on the stock.
If a boycott finds traction, things could get even worse.
Troubled clothing retailer Edcon is making some progress in turning itself around. Since Grant Pattison became CEO in February 2018, the group has closed 100 of its smaller stores, reducing its overall retail space 7%.
Pattison said the plan was to reduce its retail space 7% to 8% a year, over the next 24 months. The group wanted to do this in a way that gave its landlords enough time to find new occupants, and not to leave space standing empty for too long.
An example of this approach could be seen in the redevelopment of its store in the Johannesburg city centre. The refurbishment of its Edgars store would see it occupying one floor instead of three. The remaining space would then be taken up by a yet-to-be-named grocery retailer, several stand-alone stores and a gym.
SA Corporate Real Estate, Edcon’s landlord would foot the R184m bill for the refurbishment of the building, and Edcon’s employees at that store will be moved to its other stores while the 14-month long revamp takes place.
The difficulty at the retailer resulted in its sending a letter in December to its landlords, which held 41% of its 1,350 stores, asking them to take a 5% holding in the group in exchange for a two-year “rent holiday”.
Pattison rightly describes Edcon's landlords as "reluctant investors". Becoming a shareholder in the retailer might not be what they signed up for, but given the alternative of having an empty storefront, its easy to see why they decided on this option.
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