Subscribe

MTN's new empowerment scheme kicks off

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 12 Sept 2016
Black South Africans can apply to buy shares in MTN Zakhele Futhi - at R20 a share - with a minimum investment amount of R2 000.
Black South Africans can apply to buy shares in MTN Zakhele Futhi - at R20 a share - with a minimum investment amount of R2 000.

MTN's new black empowerment scheme, MTN Zakhele Futhi, kicked off this morning. The offer period for the stock will close at 16h00 on 21 October.

Speaking at the launch event in Johannesburg today, MTN SA CEO Mteto Nyati said MTN is fundamentally committed to transformation and empowerment in South Africa.

"The MTN Zakhele Futhi offer is designed to provide the black public with an opportunity for exposure to MTN's geographically diversified operations, earnings and growth markets," said Nyati.

The telecoms operator is inviting black South African individuals and groups to subscribe for over 123 million ordinary shares in MTN Zakhele Futhi - at R20 a share - with a minimum investment amount of R2 000.

The special purpose empowerment vehicle's prospectus is now available on MTN's Web site or at Nedbank branches and MTN stores country-wide.

The initiative allows historically disempowered black South Africans to subscribe for shares in MTN Zakhele Futhi which, in turn, will acquire shares in MTN at an effective 20% discount to the transaction price.

MTN says Zakhele Futhi is potentially valued at up to R9.9 billion and is envisaged to hold approximately 4% equity in the MTN group.

This as the telco's current BEE vehicle MTN Zakhele, which launched in 2010, prepares to be unwound on 24 November 2016, when the third-party and notional vendor funding is scheduled to be repaid. Under the unwinding scheme, existing MTN Zakhele shareholders have the option to receive MTN Zakhele Futhi shares in consideration for the buyback of their MTN Zakhele shares.

"The proposed implementation of the MTN Zakhele Futhi scheme, together with the MTN Zakhele re-investment offer, is a further expression of the empowerment and transformation principles which are embedded in the DNA of MTN's business," according to the company.

MTN is committed to transformation and empowerment in SA, says MTN SA CEO Mteto Nyati.
MTN is committed to transformation and empowerment in SA, says MTN SA CEO Mteto Nyati.

In the past, BEE shares were traded on the over-the-counter BEE market, but in 2014 the Financial Services Board mandated these shares must be traded on a licensed exchange in future. This led to MTN Zakhele listing on the JSE's BEE segment in November 2015.

Nyati said MTN's transformation journey spans more than two decades, during which the company has sought to benefit hundreds of thousands of black South Africans and groups through empowerment initiatives, including the MTN Asonge and MTN Zakhele BEE schemes.

In addition to the new MTN Zakhele Futhi scheme, the MTN board of directors has also proposed the introduction of a new employee share ownership plan for MTN staff, excluding directors and management.

MTN group executive chairman Phuthuma Nhleko previously said transformation and empowerment remain at the core of MTN's ethos and culture.

"This new transaction, together with the continued recognition of the contribution of the MTN Zakhele scheme, will ? if fully subscribed ? immediately translate to an effective indirect black ownership in excess of 30% of MTN's South African operations under relevant industry transformation charters," he said.

Applying for shares in the BEE scheme does not, however, guarantee an applicant will be allocated shares. After the offer period closes, MTN Zakhele Futhi will determine whether an application was accepted and how many shares the applicant will receive. MTN says if applicants do not receive all the shares applied for, they will receive the money back for the shares they did not receive. If this is due to an oversubscription, applicants will also receive interest on the money from the closing date until the date of refund (both days excluded).

MTN will embark on a roadshow to inform the public about MTN Zakhele Futhi. This will begin on 17 September in Johannesburg and will then move to 15 other cities and towns across South Africa over the coming weeks.

Share