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Wednesday, Oct 16th

MTN launches new R9.9-billion B-BBEE transaction

MTN launches new R9.9-billion B-BBEE transaction.

The MTN Group has announced its intention to implement a new R9.9-billion Broad-Based Black Economic Empowerment (B-BBEE) transaction called MTN Zakhele Futhi on 12 September 2016.

MTN Zakhele Futhi will replace the company's existing special purpose empowerment vehicle, MTN Zakhele which contractually unwinds on 24 November 2016, according to a statement issued by the company.

The mobile operator believes the new transaction will ensure that it maintains its BBEE targets, in line with the ICT Sector Code (ICT Charter) and B-BBEE Act.

"MTN Zakhele has created exceptional value for its 124 00 black investors, notwithstanding an extremely difficult nine months, increasing nearly fourfold from R20/share at inception in 2010, to about R77/share when the share price closed last Wednesday, 17 August 2016. That equates to a total return of about 400% and a compounded annual growth of about 26% .... The proposed MTN Zakhele Futhi scheme will take the form of a public offering where (i) qualifying black participants will be invited to subscribe for and beneficially own ordinary shares in MTN Zakhele Futhi (with a minimum investment amount of R2,000); and (ii) MTN Zakhele shareholders will be given the opportunity to re-invest a portion of their MTN Zakhele shares in MTN Zakhele Futhi. MTN Zakhele Futhi is a special purpose vehicle, which will hold approximately 4% equity in MTN Group," the company has stated.

MTN shares issued to the new transaction will be issued at R102.80 which the operator says is a 20% discount to the 10-day volume weighted average per MTN share of R128,50 on 17 August.

MTN Group Executive Chairman Phuthuma Nhleko says "This new transaction, together with the continuing contribution of the MTN Zakhele transaction, will translate to an effective indirect "see-through" black ownership in excess of 30% of MTN's South African operations," he says.

In addition to the new MTN Zakhele Futhi scheme, the MTN Board of Directors has proposed the introduction of a new employee share ownership plan (ESOP) for MTN staff, excluding directors and management.

According to the company the new ESOP scheme will not require equity from eligible participants. Accordingly, MTN will issue approximately 0.1% of its issued share capital to be held in a trust for the benefit of these employees.

The MTN Zakhele Futhi offer is expected to close on 21 October 2016.

Looming strike

Last week ITWeb quoted the Communication Workers Union (CWU) as saying a strike is "imminent" after parties disagreed over the planned outsourcing of some of MTN's call centre operations.

In the beginning of August MTN stated it had adopted a hybrid outsource model to optimise operations and enhance customer experience. This, the company said, would result in the retention of some call centre facilities, while others would be outsourced to a third party vendor.

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