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MTN in a wrangle over sale of R6bn stake
The source of the disagreement is the interpretation of the company's licence conditions, writes THABO KOBOKOANE
MTN chairman Nthato Motlana confirmed this week that Cable & Wireless (C&W), the UK-based telecommunications giant, would dispose of its 25% interest. Also up for sale is the 15.5% of MTN held by US telecoms group SBC Communications. SBC is now a major shareholder in Telkom, which owns MTN rival Vodacom, and has been instructed by the Competitions Board to sell. C&W announced in November that it would divest its global investments in which it had no strategic control, but has not yet confirmed its stance on MTN. The dispute between MTN and government, represented by the communications department, centres on the allocation of MTN shares to black empowerment companies. Government has proposed to combine both the C&W and SBC stakes into one and apportion the 40.5% between an international telecoms partner (20%), existing MTN shareholders (10%), and black empowerment companies (10.5%). Existing shareholders, who have pre-emptive rights on both shares, however, are keen to see the two handled separately with the C&W stake offered to an international partner to inject capital and technical expertise. The SBC stake would then be split between existing shareholders and black empowerment entrants. Motlana, who represents SA's largest black-controlled group, Nail, on the MTN board, confirms that shareholders would prefer to separate the stakes. "We want to sell the entire 25% C&W stake to a foreign partner with the SBC holding devoted to shareholders and empowerment groups," he says. MTN has already met a number of international players - including Telia of Sweden and both Italian and Portuguese state-owned telecoms companies - to discuss the sale. The director-general of the communications department, Andile Ngcaba, denies that he has a dispute with MTN. "We are neither a buyer nor a seller of the stake. But we control the licence, which gives us an obligation to ensure that MTN remains in SA hands and that black empowerment partners are introduced." Motlana says shareholders, SBC, C&W and government will meet later this month to discuss the proposed sale. The dispute is a continuation of the debate between government and MTN shareholders over the interpretation of the MTN licence. Government argues that it has pre-emptive rights over MTN in terms of MTN's licence conditions, but MTN says the conditions were amended when SBC bought its 15.5% interest in 1995. The dispute is likely to delay and complicate the sale of these two portions. Excluding SBC and C&W, the other MTN shareholders are Transnet (20%), M-Cell (29.5%) and Nail (3.5%). Nail's interest is held through its 70% stake in Nafcom. Nafcom has a 44.7% interest in Naftel, which in turn holds a further 10% of MTN. Nail is keen to increase its stake in MTN by about 10%. Government's proposals, if they stand, could scupper these plans. Using the government model, it seems probable that Transnet and Nail would acquire 5% each as existing shareholders. This will effectively increase Nail's interest to 8.5%. Apparently the black empowerment interests have been split between a Rethabile-led consortium, acquiring 5%, a Safika-led one with 3.5%, and an unnamed consortium acquiring the remaining stake. But this could change depending on what transpires between government and MTN shareholders over the process to be followed in this transaction. MTN is unlisted, but using M-Cell's share price (M-Cell has a 29.5% interest in MTN), the cellphone network provider could be worth R14-billion and SBC and C&W's combined stake R6-billion.
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