SENS Note - 10 August 2004

MTN slides while state negotiates sale of stake

MTN slides while state negotiates sale of stake August 10, 2004 By Gugulakhe Masango Johannesburg - The department of public enterprises was unable to disclose when it expected to conclude the sale of a 5 percent stake in MTN Group to Umthunzi Telecoms Consortium, it said on Friday. `There are still ongoing negotiations with the preferred bidder, Umthunzi,` said Gaynor Kast, the department`s spokesperson. The 5 percent stake is expected to be worth about R2.4 billion. Umthunzi priced its offer for the shares close to the market price. The shares of MTN approached a four-year high of about R35 a share in April, following the announcement of Umthunzi as a preferred bidder. A trader said at the time the deal removed the threat of an overhang and improved MTN`s black empowerment credentials. But MTN`s share price has since come under pressure and on Friday closed 25c lower at R26.90, while the telecoms services sector fell 0.85 percent. Another trader said the share price was being dragged down by questions around MTN`s expansion strategy. As of June, MTN had failed to enter Saudi Arabia, Iran, Kenya and Algeria to operate a cellphone licence. `We know the buyer of the 5 percent stake and the delay of the transaction shouldn`t push the share price down,` a trader said. Umthunzi, led by Denel chairman Sandile Zungu, is owned by non-governmental organisations and trusts such as the SA Railway Workers` Union Enablement Trust, the National Association of People Living with HIV and Aids and the African Vanguard Rural Development Trust. `The transaction is on track,` Zungu said. Kast said an announcement would be made once negotiations had been concluded. The government`s 5 percent stake in MTN is held through Transnet and the M-Cell Trust. The sale of MTN shares is part of the government efforts to restructure Transnet and reorganise its financial operations.