The controversial Elephant Consortium is being unwound, with the beneficiaries, including former communications department director-general Andile Ngcaba, potentially earning a substantial profit.

TechCentral estimates Elephant probably raked in more than R3bn from the sale of its shares in Telkom and Vodacom. This excludes the R1,4bn or more in dividends that the consortium has earned since it bought its stake in Telkom in May 2005.

At the time, many political parties and analysts slammed the deal. They questioned whether Ngcaba should have been allowed to buy the stake given his then-recent past as policy maker in the telecommunications industry.

ANC spokesman Smuts Ngonyama controversially profited from the deal, and famously said at the time that he had not struggled against apartheid to be poor. Other beneficiaries included ANC-aligned businesswoman Gloria Serobe.

Given its complex structure, it’s difficult to calculate how much the Elephant Consortium has profited from the deal over the years. And a big chunk of the proceeds of the sale of its stake in Vodacom and Telkom may have had to be used to settle debt in the structure. Elephant held about 2,5% of Vodacom’s equity.

But a source close to Telkom, who has watched the deal closely, says members of the Elephant Consortium have “made a bloody fortune”.

The Elephant Consortium, whose stake is housed in a company called Newshelf 772, quietly sold most of its shares in Telkom — and the shares it inherited in Vodacom — and plans to unwind the business within the next 30 days.

Brandon Doyle, CEO of Convergence Partners, which holds Ngcaba’s interest in Telkom, says Newshelf 772 sold most of its shares in Telkom before the end of May. They were sold in the open market. This was done in order to repay debt owed to Elephant’s funding partners, mainly Nedbank and Absa.

Members of the consortium have the option of continuing to hold the remaining Telkom and Vodacom shares, which will be distributed to them out of Newshelf, or to sell them. Doyle says Ngcaba will continue to hold shares in both Telkom and Vodacom through Convergence Partners.

The sale leaves Telkom without an empowerment shareholding of any significance. This may be what has prompted communications department director-general Mamodupi Mohlala’s recent comments that the group needs to conclude a new empowerment deal. — Duncan McLeod, TechCentral