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Cisco: Building A Better Tomorrow In South Africa

A vital part of Cisco's global strategy is to take proactive steps to support government, business, and community leaders of countries which foster the highest growth potential within their national economic agendas. In this spirit, we are proud to announce our long-term commitment and support to the Government and the community of South Africa as they work to address the long-term socio-economic transformation of their society and country.

Cisco's commitment to socio-economic transformation in South Africa

Cisco today announces a wide-ranging Black Economic Empowerment (BEE) strategy and structure for its South African operations. Our BEE strategy, grounded on a core philosophy that acts as a guiding light for the entire company, ensures our comprehensive participation in all aspects of the BEE scorecard. Significant components include:

  • Cisco's full support for the goal of economic transformation in South Africa; in particular, the meaningful participation of Black South Africans in the economic success of the country, including our operations.
  • Our efforts to ensure that Cisco South Africa's long-term corporate and social make-up are consistent with the broader demographics of South African society.
  • Our mission to grow the Information Communications and Technology (ICT) sector in South Africa, via skills transfer and other important initiatives.

Cisco's commitment to empower its South African operations

In alignment with our BEE philosophy, we're pleased to announce an innovative BEE transaction providing economic participation in Cisco's South African operations (comprised of three separate entities) for a broad-based grouping of Black South African (African, Indian, and Coloured persons) investors. The BEE parties will be comprised of an external Investment Partner, a trust representing Cisco's Black South African employees, and a newly created Education Trust. Following the completion of the transaction, which is subject to customary closing conditions such as regulatory approvals, the BEE partners will have voting rights in the local entity and will hold long term share participation rights in the form of common stock of Cisco Systems, Inc. of equivalent value to the underlying stakes of the South African operations. This approach provides the investors access not only to the value of Cisco's South African operations but also to the value of Cisco's businesses on a global basis through the holding of Cisco Systems, Inc.'s publicly traded common stock. Consistent with requirements of the BEE codes, the Cisco shares may not be disposed of until 2017. This structure is designed to provide the BEE parties with a more liquid asset, following the expiration of the BEE holding period, than holding shares of a non-trading entity. The entire transaction will be funded by Cisco on favourable terms to the BEE parties.

  • The external Investment Partner, the Employee Trust, and the Education Trust will acquire equity having a value representing a 25.1 percent stake in a newly created services organisation, which will support the technology needs of major organisations.
  • The Employee Trust and the Education Trust will acquire equity having a value representing a 25.1 percent stake in Cisco's vendor financing business, which offers financing to both Cisco's strategic customers as well as its broader customer base.
  • Lastly, the Employee Trust and the Education Trust will acquire equity having a value representing a 20 percent stake in Cisco's general sales and marketing organisation, which supports Cisco's broad customer base in South Africa and which sells through a BEE empowered partner channel.

Cisco conducted a comprehensive process in selecting its investment partner. This process entailed a widespread search of South African BEE investor groups, followed by interviews and a bidding process to identify the right potential partners. Oversight of the process was provided throughout by senior Cisco management.

Cisco is proud to announce Lereko Investments (Pty) as our investment partner in the empowerment of the services organisation. Lereko is represented by Valli Moosa (Executive Chairman), Popo Molefe (CEO), and Lulu Gwagwa (Executive Director). The selection of Lereko was made based on a common vision of BEE, a cultural fit with Cisco, and a shared vision for transforming the ICT sector in South Africa. Following the closing of the transaction, Lereko will hold share participation rights with a value representing a 20 percent stake in the services organisation, with rights representing an additional 5.1 percent in value will go to the Employee Trust and the Education Trust. A representative of Lereko will be appointed to the Cisco Services advisory board.

"We are delighted to have Lereko join with Cisco as they bring a strong team that will contribute to growing our business, and will help us make a significant impact in the development of the ICT sector in South Africa," added Mark Baptiste, operations director, Cisco Services South Africa.

Cisco's commitment to develop the business leaders of tomorrow

The education and leadership development of Black South Africans and the advancement of women are critical long-term strategies for South Africa's success. For Cisco this starts at home - developing our staff to become leaders in the organisation. Black South African directors make up 60 percent of the local board of Cisco South Africa, and 60 and 62 percent of senior and junior management respectively. Additionally, female employees today account for approximately 30 percent of the organisation. Externally, Cisco runs more than 40 networking academies in South Africa. These institutions are teaching much needed ICT skills, while developing future leaders for the ICT industry.

Cisco is also committed to training the next generation of South Africans, and today announces a "Cisco Scholars" programme that would be one of several beneficiaries of the Education Trust. This programme will provide scholarships for high potential underprivileged Black South African students who are graduating from high school to attend the African Leadership Academy (ALA), an organisation with the bold objective of developing the next generation of leaders for Africa.

Cisco's commitment to building a better tomorrow

"We look forward to continuing to work with the Government of South Africa, contributing towards transformational growth, in order to bring the dream that is our beautiful country to fruition'' commented Steve Midgley, general manager, Cisco South Africa

"We believe that today's announcements will underpin our efforts to support the South African government in the continued transformation of the country's economy and as a result is in the best interests of all our employees, partners, and customers. South Africa truly embodies the opportunity for country transformation that Cisco is working to foster through collaboration with governments throughout Cisco's Emerging Markets theatre." commented Paul Mountford, president of Emerging Markets for Cisco.

We are excited that both our method of operation in South Africa, and the very nature of our business-connecting people and ideas-will allow us to play a role in the historic changes that are occurring in South Africa today.

For more information, visit http://newsroom.cisco.com/BEE

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