MTN Group president and CEO Phuthuma Nhleko

Africa’s largest mobile phone operator MTN is planning to sell 4% of the group’s equity to black investors in what could prove to be the largest broad-based empowerment deal in SA’s telecommunications industry.

MTN’s empowerment deal was expected to happen last year with the unwinding of the Alpine Trust-owned investment company Newshelf 664. However, just after Newshelf was unbundled, the country was struck by the global economic crisis, and MTN decided to put the empowerment deal on hold.

Newshelf was created independently of MTN in 2002. MTN management, including outgoing group president and CEO Phuthuma Nhleko, used it to buy an equity stake in the cellular group.

In a statement to shareholders on Thursday morning, MTN said: “The board of directors of is now of the view that market conditions have improved sufficiently in order to implement the MTN black economic empowerment transaction.”

MTN says the deal has an estimated value of R8,1bn, making it larger than competitor Vodacom’s deal — Vodacom concluded a R7,5bn empowerment transaction last year.

To complete the deal, MTN says it will create a holding business called MTN Zakhele Ltd, which will hold the empowerment shares for participants.

MTN’s biggest shareholder, the Public Investment Corp (the government pension fund administrator holds about 21% of the group’s equity), has agreed to make some of its stake available under the offer to allow the transaction to go ahead.

To participate in the MTN Zakhele empowerment scheme, qualifying investors will be invited to subscribe for ordinary shares at a price of R20/share.

The minimum subscription required for participation in the public offer is R2 000. 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 over-subscribed. — Candice Jones, TechCentral