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Wrangle over SBC's MTN stake
TELECOMMUNICATIONS
MTN shareholders and the government are in the midst of a dispute over who has the right to US telecommunications group SBC's 15.5% stake in the cellular phone company. The dispute centres around the licence condition attached to MTN when the the government launchedcellular industry. SBC bought its MTN stake in October 1995 for R330-million and acquired management control and the right to name the MTN chief executive. The Competition Board ordered SBC to sell the MTN shares after SBC and Telekom Malaysia bought a 30% interest in state-owned Telkom earlier this year. Telkom's 50% holding in MTN competitor Vodacom gave SBC management influence in both Vodacom and MTN. The board granted SBC a temporal reprieve to hold its stake in MTN until it found a buyer. SBC appointed US financial services group Merrill Lynch to find buyers, but this process is likely to be delayed by the dispute. Sources say the dispute arose after Andile Ngcaba, director-general in the Communications Department, told MTN shareholders that, in terms of MTN's licence conditions, his department had a prerogative to decide on the buyer for the stake. Ngcaba confirmed he had met MTN shareholders, but declined to comment. He said a statement might be issued later. One source, an MTN shareholder, said Ngcaba's claim was based on the original MTN licence which was amended when SBC bought the 15.5% stake in 1995. "The licence conditions were amended at SBC's insistence just before they signed the MTN deal in 1995," he said. Sources said Ngcaba wanted to introduce a new shareholder, possibly including an empowerment grouping, into MTN. Some MTN shareholders had indicated that they had no objections to a new shareholder, sources said. However, it is understood that other shareholders had already decided that they, in terms of their pre-emptive rights to the SBC stake, would buy the shares and only at a later stage on-sell them to a foreign group that would bring new cellular technology. MTN is not listed, but using the share price of M-Cell, which has a 29.5% stake in MTN, SBC's stake in MTN could be worth as much as R1.6-billion. MTN's shareholders include British telecommunications group Cable & Wireless, which has a 25% stake, Transnet's telecommunications subsidiary, Transtel, with 20% and New Africa Telecommunications (Naftel), a unit of Nthato Motlana's New Africa Investments (Nail) which has a 10% interest. However, Nail's effective interest in MTN is about 3.5% because of the Naftel's shareholding structure. The group has expressed an interest to increase significantly its MTN stake. MTN corporate relations executive Jacques Sellschop would not comment. ý MTN, meanwhile, has fired the next salvo in the cellular war with Vodacom by launching one of SA's largest marketing campaigns. The campaign, estimated to cost about R10-million, will see MTN give away one BMW a day for the next 50 days until Christmas to new and existing MTN subscribers. Sellschop says the campaign is aimed at boosting MTN's market share from its current level of about 45%.
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