MTN's R8.1 billion black economic empowerment (BEE) share scheme is aimed at helping its South African operations qualify for the spectrum licence and broadband ownership requirements, say analysts.
Today, the JSE-listed group announced 4% of its ordinary shares would be sold in a public offering. This would translate into an effective 29% ownership of the South African operations, it says.
Black people will be offered the shares through a special purpose vehicle (a company specifically set up to handle the transaction) called Black Investment Company. It will use the funds raised, plus a R1.2 billion cash injection from MTN, to buy 321 million MTN ordinary shares.
The share price at which the transaction will be struck is R107.46, which is based on the 20-day trading volume weighted average price of MTN's shares.
Analysts say the deal is about ensuring MTN's South African operations meet certain requirements to obtain spectrum licences and meet the national broadband policy promoted by telecoms regulator ICASA and the Department of Communications (DOC) respectively.
ICASA is in the process of auctioning off spectrum, and the DOC's National Broadband Policy was published in the Government Gazette this week.
“A deal of this type is long overdue,” says Denis Smit, MD of research firm BMI-TechKnowledge. “Obviously, they took into account the political realities and the 30% ownership mark came to mind.”
Smit says it will be interesting to see what MTN's competitors - Vodacom and Cell C - will do in response.
“Vodacom has yet to announce a deal and it appears that Cell C's BEE shareholding has slipped due to the dilution of its shares,” he says.
Vitalis Ozianyi, a senior research analyst at Frost & Sullivan, says the deal is a reaction to overall government policy that appears to want to bridge the economic and digital divides at the same time.
“The deal is aimed at putting as many MTN shares into ordinary black peoples' hands as possible, so they can benefit economically from the growth of telecommunications,” he says.
Share
