SENS Note - 21 July 2003

MTN staff need until 2008 to pay for stake

MTN staff need until 2008 to pay for stake -------------------------------------------------------------------------------- Information Technology Editor MTN staff would need until 2008 to repay the R4,3bn they were borrowing to acquire an 18,7% stake in the business, the cellphone company said at the weekend. The 309-million shares were bought by Newshelf 664, a company formed to represent about 2200 MTN staff taking part in the scheme. Together they are buying the old Transnet stake. The shares were bought at an average price of R13,90 each in a deal funded by Nedcor, Firstrand and the Public Investment Commission, which manages the state pension fund. MTN shares have been trading at above R16 since the beginning of this month, which will no doubt reassure the staff that they have made a smart move and acquired a stake in their own company for a bargain price. On Friday MTN fleshed out the structure of the deal, saying Newshelf had formed a trust of which beneficiaries were eligible employees of MTN. The five trustees include MTN CEO Phuthuma Nhleko and commercial director Irene Charnley. Nhleko and Charnley are also executive directors of Newshelf, along with MTN International MD Lazarus Zim, chief financial officer Rob Nisbet and MTN SA MD Sifiso Dabengwa. As the promoters of the transaction and beneficiaries of the trust, those directors have the right to participate in any Newshelf net surplus once all its debt and financing obligations are met. Government put the MTN shares formerly held by Transnet on the market in a bid to bring foreign capital into the country. Dutch company Ice Finance paid $475m for the stake on the understanding it would warehouse the shares until a foreign buyer with telecoms experience could be found. But this was during the telecoms slump and no foreign buyer was found, so MTN employees could hatch a plan to buy the shares. MTN has almost caught up with archrival Vodacom in terms of revenue and profit. It had a massive leap in its fortunes chiefly by bringing its Nigerian operations into the black. Group revenue for the year to March hit R19,4bn, up 56% from R12,4bn previously, while its attributable earnings of R1,9bn were a massive 226% up from R592m. Jul 21 2003 08:10:05:000AM Lesley Stones Business Day 1st Edition Monday 21 July 2003