MTN will funnel ZAR9.9 billion ($730 million) into a black empowerment investment scheme in preparation for next year’s spectrum auctions, which require bidders to have a minimum black shareholding of 30%.
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The R9,9 billion scheme will hold 1 4% equity stake in MTN and the group has warned potential investors against fronting and misrepresenting their BEE status, saying those who are caught “may be forced to sell their MTN Zakhele Futhi ordinary shares to MTN or persons identified by it, at a potentially discounted price”.
The MTN Zakhele Futhi Offer is expected to be launched on September 12, and will close on October 21.
Africa’s biggest telecoms firm said the new black economic empowerment deal would be launched via a public offer next month to replace an existing scheme that is due to unwind in November.
MTN said the transaction will allow historically-disadvantaged individuals to participate in the “economic mainstream”. “That equates to a total return of about 400% and a compounded annual growth of about 26%”, MTN said in a statement on Monday.
MTN Zakhele Futhi is a special objective vehicle that will hold about 4% equity in MTN Group.
MTN Zakhele has 124 00 black investors, and its value has increased almost fourfold from R20 a share at inception in 2010, to about R77 a share when the share price closed on August 17.
MTN Group Executive Chairman Phuthuma Nhleko, says transformation and empowerment remain at the core of MTN’s ethos and culture.
MTN Zakhele shareholders can opt to get paid out, swap their shares for MTN stock or reinvest in the new scheme. Accordingly, MTN will issue approximately 0.1% of its issued share capital to be held in a trust for the benefit of these employees.
“Over the last 22 years, MTN has been one of the standard bearers of BEE and overall transformation amongst the top 10 JSE listed companies”.
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BEE is created to widen ownership of the South African economy, which is still mainly in white hands 22 years after the end of apartheid.
