MTN Group Ltd. started a 9.9 billion rand ($727 million) economic empowerment plan that will boost black ownership of the South African unit to more than 30 percent and enable Africa’s biggest mobile operator to bid for high-speed internet spectrum.
Stock will be issued through empowerment vehicle MTN Zakhele Futhi to qualifying black employees at 102.80 rand each, a 20 percent discount to the 10-day volume weighted average price, the Johannesburg-based company said in a statement on Monday. The fund replaces MTN Zakhele, which will close on Nov. 24. Black economic empowerment programs are set up to compensate those discriminated against during apartheid.
“This new transaction, together with the continuing contribution of the MTN Zakhele transaction, will translate to an effective indirect see-through black ownership in excess of 30 percent of MTN’s South African operations,” Chairman Phuthuma Nhleko said in the statement.
The transaction makes MTN the only South African company that’s qualified to bid for high-speed internet spectrum in a proposed auction early next year. Companies need 30 percent black ownership to make an offer, according to the rules published by the Independent Communications Association of South Africa, the industry regulator. The proposed auction of five blocks of spectrum is expected to raise more than $1 billion and extend broadband access to rural parts of the country.
The proposed auction is being contested by the country’s Telecommunications Minister Siyabonga Cwele in court.
MTN shares fell 0.2 percent to 125.15 rand as of 10:46 a.m. in Johannesburg, the sixth consecutive day of declines. The stock is down 5.8 percent this year, valuing the company at 231 billion rand.