As MTN’s empowerment fund starts to wind down, the picture for shareholders looks bleak given that its shares have fallen sharply and dividends have been sparse.
MTN Zakhele Futhi (MTNZF) was launched in 2016 to replace MTN’s original Zakhele Scheme, which ran from 2010 and was unwound in November 2016. At the time, MTNZF was worth R9.9 billion, and shares were offered at R20 each.
Since then, those shares have lost 84.5% of their value. Ignoring dividends, each share is now worth only R3.10. MTNZF has declared only one dividend since its launch – a R20 payout in the middle of this year, ITWeb’s research shows. Including that dividend, an investment of R1 000 in 2016 would now be worth R3 100.
For comparison, the JSE All Share index has returned 83% over the same period, while MTNZF shares have fallen 35.4% over the past five years.
As the fund winds down, it has told shareholders it no longer holds any MTN shares. MTNZF sold its stake in MTN for R391 million before tax and costs. This makes each share worth R4 on a net asset value (NAV) basis.
ITWeb’s calculations focus on share price and dividends, not NAV. The fund has not yet decided how to return NAV value to shareholders and is “engaging with its advisers and MTN in this regard,” it said on Friday.
MTNZF, as a vehicle, allowed what the B-BBEE Commission described as “multitudes of black participants” to subscribe, a statement the commission made just after its formation. The fund bought around 4% of MTN at a 20% discount, making these participants indirect MTN shareholders.
However, the scheme has faced ongoing financial challenges, in addition to being interrogated by the commission in 2019 for being “inconsistent with the objectives” of the Broad-Based Black Economic Empowerment Act. It has also previously reported a loss and, at times, had to borrow money from MTN to keep operating.
For the 12 months to December, MTNZF said it had reversed its 2023 loss, although a drop in MTN’s share price caused a “fair value” loss of R1.2 billion. This reflects the true value of MTN shares based on factors beyond the current share price, including growth potential.
The fund also reported liabilities of R4.8 billion.
In its most recent annual report for 2024, MTNZF noted that MTN’s suspension of dividends had “a significant impact on the ability of MTN Zakhele Futhi to continue as a going concern”. Its only major asset is its MTN stock.
MTN’s share price has gained almost 140% over the past five years, outpacing the All Share Index.
Peter Takaendesa, chief investment officer at Mergence Investment Managers, recently examined the listed telecoms sector and said it had delivered good returns over the past five years, recovering from the COVID-19 market selloff in early 2020. “MTN and Telkom have led the recovery,” he said.
Takaendesa added that the strong performance of the telecoms index in 2025 reflects a catch-up after lagging until December 2024, largely due to currency devaluations in Africa affecting major operators, including Vodacom and MTN. He said this catch-up is also driven by easing macro-economic headwinds and long-overdue price increases to recover from rising costs over the past few years.
Looking back to 2020, during the difficult trading period caused by the COVID-19 pandemic, MTNZF borrowed R15 million from MTN to cover a cash shortfall.
The fund’s annual report said MTN’s suspension of dividends “had a direct impact on the company’s liquidity, including its ability to pay scheduled payments owing to the third-party funders and operational costs as they become due and payable”.
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