Media Comment - 09 January 2002

Transnet sells 20% M-Cell stake to holding company

Transnet sold its 20% stake in M-Cell to Dutch-based passive holding company Ice Finance BV for $475m at R18.05 a share or an 18% premium on M-Cell's closing share price of R15.30 on 7 Jan 02. Ice has undertaken not to sell the stake within the next 18 months, allowing Transnet to continue searching for a strategic equity partner for M-Cell. The deal converts the stake into cash but leaves Transnet with almost all the privileges of ownership, including the right to agree on the ultimate buyer, participate in dividends, vote on the stake, nominate directors and even participate in any increase in the price. Finding a partner for M-Cell have been complicated by the collapse of telecommunication shares internationally, and several uncertainties surrounding M-Cell and the local regulatory environment. By the end of the 18 month period the local regulatory environment will be clearer, a potential investor will probably know whether M-Cell intends to take part in the second fixed-line service, M-Cell's revenue from its Nigerian operation will be more apparent and the global economic environment may be stronger. Analysts welcomed the deal, saying the advantages for government and Transnet were obvious, and endorsed the idea of delaying the final stake.