MTN South Africa has announced that it will make 4% of its shares available to black South Africans, in the largest empowerment transaction in the telecoms sector to date. The stake, which is worth an estimated ZAR8.3 billion (USD1.1 billion), sees MTN follow in the footsteps of rival Vodacom, which sold 6.25% of its operation for ZAR7.5 billion in a similar deal in July 2008. MTN will sell stakes in the business through the National Empowerment Fund’s Asonge scheme. The company will also offer 0.1% of its shares to black employees – excluding management and directors – who have suffered from apartheid discrimination in the past. They will not be required to make an equity contribution.
The transaction, which is dubbed MTN Zakhele, will be offered to the public at the end of August 2010. It will be open for a six-year period, with investors locked in for the first three years; at the end of the three years they will be allowed to sell, but only to other BEE investors. Investors will have to put in a minimum of ZAR2000, for 100 shares. An MTN statement said that 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 oversubscribed.
The deal will cost MTN in the region of USD301.43 million, which includes USD129.96 million in vendor financing, and USD20.01 million to cover the cost of the employee share ownership programme. Black investors will indirectly own 29% of MTN South Africa. CEO Phuthuma Nhleko said that black economic empowerment (BEE) was ‘integral to the ethos of MTN’.