SENS Note - 22 November 2016

MTN - results of MTN Zakhele Futhi Offer

Unless defined in this announcement or if the context dictates otherwise, capitalised terms used in this announcement have the same meanings as given in the circular to MTN Shareholders dated 6 September 2016 (“Circular”). In terms of the MTN Zakhele Futhi Offer, which closed at 16h00 on Friday, 28 October 2016, an invitation was made (i) to the black public (individuals and groups) to subscribe for MTN Zakhele Futhi Ordinary Shares; and (ii) to qualifying MTN Zakhele Shareholders to re-invest all or a portion of their investment in MTN Zakhele into MTN Zakhele Futhi Ordinary Shares in accordance with the terms of the MTN Zakhele Unwinding Scheme. MTN Shareholders are hereby advised that all of the Transaction Conditions Precedent, as set out in the Circular, and all outstanding conditions under the Finance Documents, have been met and as a result the final implementation of the 2016 MTN BEE Transaction has commenced, with closing expected to occur on 23 and 24 November 2016. MTN Zakhele Futhi Ordinary Shares will be allotted and issued by MTN Zakhele Futhi to successful applicants on Wednesday, 23 November 2016. Information will be communicated to all applicants on or before 23 December 2016 to inform them, inter alia, of the status of their applications, including, where applicable, the extent to which their applications were accepted and the number of MTN Zakhele Futhi Ordinary Shares that were allocated to them. To the extent that applications were not accepted, refunds will be paid on or before 23 December 2016. MTN would like to thank every successful applicant for taking this opportunity to build their future with MTN Zakhele Futhi Ordinary Shares. Results of the MTN Zakhele Futhi Offer Since the closing of the MTN Zakhele Futhi Offer, a detailed process of reconciliation has been undertaken to ensure that due process was followed during the finalisation of allocations of MTN Zakhele Futhi Ordinary Shares to applicants who made valid applications. The MTN Zakhele Futhi Public Offer raised approximately R1.094 billion from more than 81 000 applicants from across South Africa. In addition, applications were received from 11 203 qualifying MTN Zakhele Shareholders holding in aggregate 13 479 330 MTN Zakhele Shares to re-invest the MTN Zakhele Scheme Consideration in respect of these MTN Zakhele Shares into MTN Zakhele Futhi Ordinary Shares, equating to approximately R0.817 billion. Applications (in aggregate) from the black public and qualifying MTN Zakhele Shareholders, although exceeding the Minimum Equity Raise (being an amount of R1 234.1 million), were less than the Target Equity Raise (R2 468.3 million). The cash raised by MTN Zakhele Futhi under the MTN Zakhele Futhi Public Offer exceeded the minimum amount of cash required for the 2016 MTN BEE Transaction to proceed (being an amount of R250 million). As set out in paragraph 5 below, MTN has exercised the option for its nominee to subscribe for the MTN Zakhele Futhi Underwrite Shares and will accordingly subscribe for 27 848 672 MTN Zakhele Futhi Ordinary Shares for an aggregate consideration of R557 million. The total number of MTN Zakhele Futhi Ordinary Shares to be issued and allotted on 23 November 2016 is 123 416 822. Refunds Refunds will be made in respect of all applications which were unsuccessful in accordance with the provisions set out in the Prospectus. Refunds will be paid on or before 23 December 2016 by electronic funds transfer into each affected applicant’s specified transactional bank account. Interest will not be paid on the refunded amounts. Letters of allocation and related documents A welcome pack containing, inter alia, a welcome letter, confirmation of share issuance, a token share certificate and important MTN Zakhele Futhi shareholder information will be sent to all successful applicants on or before 23 December 2016. Amendments to the Capital Structure Model The MTN Board has resolved to proceed with the implementation of the 2016 MTN BEE Transaction on the basis that MTN will (i) subscribe for MTN Zakhele Futhi Underwrite Shares to make up the equity shortfall (i.e. the difference between the equity actually raised pursuant to the MTN Zakhele Futhi Offer and the Target Equity Raise); and (ii) provide additional Notional Vendor Finance to MTN Zakhele Futhi to ensure that the required 4:1 Inception Total Share Cover Ratio is achieved. In accordance with the Implementation Agreement, and having regard to (i) the transaction sizing (being a target percentage holding for MTN Zakhele Futhi in MTN, following the implementation of the 2016 MTN BEE Transaction, of 76 835 378 MTN Shares in the issued share capital of MTN, representing approximately 4% of MTN's issued share capital on a fully diluted basis); and (ii) the Inception Total Share Cover Ratio being below 4:1 times, the following adjustments were made to the Capital Structure Model: - MTN (or its nominee) will subscribe for the entire equity shortfall, being 27 848 672 MTN Zakhele Futhi Ordinary Shares, at R20.00 per share. MTN intends to warehouse these shares for a period of time and to then on-sell them to select qualifying parties. MTN has already received expressions of interest in this regard; - MTN will increase the Notional Vendor Finance by issuing 2 392 833 additional MTN Shares to MTN Zakhele Futhi at their par value of R0.0001 each on the terms and conditions of the MTN Tranche 1 Subscription and Call Option Agreement; and - the preference share funding was set to R2 160 857 000, comprising 2 160 857 MTN Zakhele Futhi Pref Shares. Resultant issues and repurchases of MTN shares In accordance with the final Capital Structure Model, MTN will allot and issue a total of 76 835 378 MTN Shares of par value R0.0001 each to MTN Zakhele Futhi on the Closing Dates, which MTN Shares are comprised of and have been calculated as follows: - 25 721 165 MTN Tranche 1 Subscription Shares, to be issued to MTN Zakhele Futhi at R0.0001 per MTN Share on Wednesday, 23 November 2016; - 15 367 075 MTN Tranche 2 Subscription Shares, to be issued to MTN Zakhele Futhi at R0.0001 per MTN Share on Wednesday, 23 November 2016; - 29 388 316 MTN Tranche 2 Subscription Shares, to be issued to MTN Zakhele Futhi at R128.50 per MTN Share on Wednesday, 23 November 2016; and - 6 358 822 MTN Tranche 3 Subscription Shares, to be issued to MTN Zakhele Futhi at R128.50 per MTN Share on Thursday, 24 November 2016. Pursuant to the terms of the MTN Zakhele Repurchase Agreement dated 21 August 2016 and the Existing MTN Tranche 1 Subscription and Call Option Agreement dated 12 July 2012, as amended (each agreement as more fully described in the Circular), MTN will repurchase 30 732 593 MTN Shares at R112.65010 per MTN Share in terms of the MTN Zakhele Specific Repurchase and 5 882 100 MTN Shares at their par value of R0.0001 per MTN Share in terms of the MTN Zakhele NVF Specific Repurchase on Thursday, 24 November 2016.

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