Press Releases

MTN announces an R8.1 billion BEE transaction

As part of its on-going empowerment drive, the MTN Group today unveiled a proposed Broad-Based Black Economic Empowerment (BBBEE) transaction to be executed through its South African local listing.

“BEE is integral to the ethos of MTN, and MTN believes that broad-based BEE participation is important to its future success as a Group,” said Phuthuma Nhleko, MTN President and CEO.

The transaction will further broaden MTN South Africa’s effective BEE ownership through a public offer to Black individuals and groups, and will reasonably take MTN’s effective indirect BEE ownership level in South Africa beyond 30% when combined with MTN’s previous BEE initiatives.

The new MTN BEE Transaction - to be called MTN Zakhele, invites Black South African investors to participate in the acquisition of up to 4% equity ownership in the listed holding company. The 4% equity, worth approximately R8.1 billion, will give MTN South Africa an additional effective black ownership of up to 29.1%, thus making the new MTN BEE transaction the largest empowerment deal in South Africa’s telecommunications sector to date.

Though the MTN Zakhele scheme will be executed through MTN’s South African listing, it will give these investors exposure to MTN’s diversified operations and growth markets.

“Since its incorporation in South Africa in 1994, MTN has been at the forefront of BEE in South Afrca and remains fully committed to the principles of BBBEE to provide long-term and sustainable benefits to its participants. It is for this reason that we have structured the new MTN BEE Transaction through an offer to the Black public, acting as far as possible within the letter and the spirit of the BBBEE codes and empowerment requirements for South African businesses,” said Nhleko.

The new MTN BEE offer is expected to open to the public on 30 August 2010. A prospectus with details of the offer will be available from this date at MTN retail stores and Post Office outlets around the country.

The transaction is envisaged to run for a period lasting six years, the first three of which will be a lock-in period after wich participants will be free to trade with other BEE investors.

To participate in the MTN Zakhele empowerment scheme, qualifying investors will be invited to subscribe for ordinary shares at a price of R20 per share. The minimum subscription required for participation in the public offer is R2,000 (i.e. 100 ordinary shares). There will be no cap per individual investing in the MTN Zakhele empowerment scheme. All valid share applications will be considered, and a bottom-up allocation process will be followed should the scheme be over-subscribed.

In addition to the Zakhele scheme, MTN will issue approximately 0.1% of its issued share capital on a fully diluted basis to an Employee Share Ownership Plan (ESOP). Eligible employees will not be required to contribute equity in order to participate in the ESOP. MTN management and directors will not participate in the ESOP.

Nhleko says black equity ownership is a key pillar of BEE, and the MTN Zakhele scheme will augment many empowerment initiatives undertaken by MTN to date. These include the Asonge scheme facilitated by the National Empowerment Fund (NEF) three years ago.

Until December 2008, MTN South Africa obtained the majority of its equity ownership points in terms of the BEE codes through a 13% shareholding held by the Alpine Trust (through Newshelf 664) in MTN. When the Newshelf structure was unwound last year, MTN acquired Newshelf from the Alpine Trust and made known its intention to use a portion of MTN shares previously owned by Newshelf (Newshelf Unwind) to faciliate a new MTN BEE Transaction.

The implementation of this MTN BEE transaction was delayed due to severe constraints in financial markets at the time of the Newshelf Unwind.

Karel Pienaar, MTN South Africa MD, said the MTN Zakhele empowerment transaction, facilitated by the Group, will enhance MTN SA’s BEE credentials and supplement other areas of the BEE scorecard such as preferential procurement, skills development, employment equity and enterprise development.