(Ecofin Agency) - In a statement published on August 22, 2016, South African telecom giant MTN announced that it was selling 4% of its capital to local black investors. The transaction which involves the firm’s ordinary shares will take the form of an IPO entitled MTN Zakhele Futhi.

Estimated to R9.9bn (US$730,620,000), MTN’s offer will be launched next month. Only black investors with a certain number of criteria, of which a minimum investment of R2,000 ($146.6), are allowed to subscribe to the offer. MTN’s shares which are to be sold through the MTN Zakhele Futhi offer, will go for R102.8 (US$7.48) each, thus 20% less than the share’s price on August 17, 2016, knowingly R128.5 (US$9.39).

According to the MTN Group, the MTN Zakhele Futhi offer should be launched on 12 September 2016 and close on 21 October 2016. Brochures with information about the offer will be available in all Nedbank’s offices and in MTN stores across South Africa. In addition to the MTN Zakhele Futhi offer, MTN’s board also suggested the development of a new employee shareholding plan (ESOP), excluding management and administrators. According to the new plan, about 0.1% of MTN Group’s social capital will be opened to its employees.

By offering 4% of its capital to new black nationals, MTN Group would be giving more than 40% of its capital to Black Economic Empowerment (BEE). Indeed, local black investors currently hold 38.75% of the firm. As a result the group is eligible for the acquisition process for new 4G frequency licences, launched by the Independent Communications Authority of South Africa (ICASA).

Phuthuma Nhleko, CEO MTN Group, said the operation to sell shares to black nationals translates the culture of empowerment and transformation of previously disadvantaged individuals and groups, who are important to MTN.

Muriel Edjo