MTN also provides broadband in South
(Images: Bongani Nkosi)
• Maphamola Lebelo
MTN Group Communications
+27 83 212 9918
MTN, the biggest mobile phone operator in Africa, has finally launched its R8.1-billion (US$1.1-billion) broad-based black economic empowerment (BEE) shares scheme in South Africa.
This is welcome news for current and potential investors, as the deal has been on the cards for two years now and looked set to be plagued by further delays in July 2010, when it was announced there were “severe constraints in financial markets”.
The name of the new BEE scheme is Zakhele, which means “built it yourself” in local Nguni languages. It came into effect on 30 August.
MTN is inviting share applications from previously disadvantaged black South Africans, which by law includes African, coloured, Indian and Chinese citizens. Individuals and groups can apply for shares.
The 4% equity deal will increase the group’s BEE ownership, which currently stands at 29.9% when combined with its other economic empowerment initiatives like the Asonge scheme facilitated by the National Empowerment Fund in 2007.
MTN Zakhele is the largest empowerment deal in South Africa’s telecommunications industry history, following Vodacom’s R7.5-billion ($1-billion) BEE scheme in 2008. The Vodacom deal also targeted previously disadvantaged black South Africans and benefited the group’s partners, Royal Bafokeng Holdings and Thebe Investment Corporation.
“MTN believes that broad-based BEE participation is important to its future success as a group,” MTN president and CEO Phuthuma Nhleko said in a statement.
The group has supported black empowerment since 1994 and will seek to provide long-term and sustainable benefits to black South Africans, Nhleko said.
“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 codes and empowerment requirements for South African businesses.”
Karel Pienaar, MTN South Africa managing director, said in July that the empowerment transaction “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”.
Black investors who qualify for the scheme are being offered shares at R20 ($2.70) apiece. The minimum investment amount is 100 shares, which is worth R2 000 ($270).
MTN and the Public Investment Corporation have made 75-million shares available through the Zakhele scheme, which is planned to run for six years.
MTN black employees will also benefit
The group said it will offer about 0.1% of its issued share capital to its Employee Share Ownership Plan to benefit BEE-eligible employees. Management and directors of the JSE-listed company will not be allowed to participate in this scheme.
MTN is a big player in South Africa and creates stiff competition for other local operators like Vodacom and Cell C. It’s a multinational firm, operating in 21 African countries and the Middle East. In 2006 it had 40-million subscribers, and this number has been growing ever since.