MTN’s black economic empowerment (BEE) share scheme MTN Zakhele is expected to list on the JSE on 5 November.

With a market capitalisation of R8,2bn, MTN Zakhele will be the first BEE empowerment share scheme to list on the JSE’s BEE board from its current over-the-counter (OTC) platform.

Its imminent listing follows an issue of a directive by the Financial Services Board (FSB) which plans to put a stop to unlicensed exchanges — extending to the OTC platforms.

The FSB earlier this year granted MTN Zakhele an extension to October for trading shares on the OTC platform. MTN Zakhele’s move to the JSE is set to provide its shareholders with regulatory certainty for trading their shares.

The FSB attached a condition to the extension, provided that MTN Zakhele continues to make progress on its preparations for a listing on the JSE.

In preparation for its listing, the existing MTN Zakhele OTC share trading platform will be shut down and shareholders will be migrated onto a new system which will enable trading on the JSE platform.

“There will be a brief disruption in trading prior to listing from 16 October 2015 to November 5 2015 to enable, among other things, migration of shareholder data,” says MTN Zakhele chair Sindi Mabaso-Koyana.

“All MTN Zakhele ordinary shareholders, whether they have registered previously for the OTC share trading platform or not, will need to be verified, and all shareholders who wish to use the new transaction platform to trade their shares in the JSE environment will need to register on the new transaction platform,” says Mabaso-Koyana in a statement.

As a result of the FSB’s directive, other BEE share schemes such as Vodacom’s YeboYethu, MultiChoice’s Phuthuma Nathi and Sasol Inzalo, which are active on the OTC platform, have had to scramble for new trading platforms.

The FSB laid strict options for BEE schemes that trade via OTC: either find a new exchange to trade on, halt trading or apply for an FSB exemption.

While BEE shares have courted criticism for not creating value for shareholders, industry players rate MTN Zakhele as a strong value proposition.

When telecommunications giant MTN launched MTN Zakhele in 2010, its share price was listed at R20. This has since grown to R102 (as of 21 September 21 at 1pm). MTN Zakhele owns 4% of MTN.

The BEE share scheme does not pay dividends but deploys its dividend proceeds received from MTN to pay existing debt which stands at about R4,4bn, according to its 2014 annual report.

Over the years, the company has benefited from steadily reducing the cost of debt,” Mabaso-Koyana said in July. Also, income payouts to shareholders will depend on the performance and dividend payments from MTN, she says.

MTN Zakhele needs to repay the debt by 2016 — this is when restrictions of existing shareholders selling shares to only black people will be lifted.

Analysts peg MTN Zakhele’s assets’ worth at about R16bn (largely its shareholding in MTN). There is a direct correlation between MTN’s share price and MTN Zakhele’s, given that the company is the BEE scheme’s primary asset.