MTN Zakhele, YeboYethu shareholders get bang for their buck

2014-07-06 06:00

BEE share trading in the telecoms sector has exceeded analysts’ expectations and have provided value for initial investors.

MTN Zakhele is the BEE scheme launched by cellphone giant MTN in 2010.

The scheme allowed shareholders to buy shares at R20, while the rest of the share price was financed through notional vendor financing from the company, donations from MTN and funding from third-party lenders. MTN Zakhele owns 4% of MTN’s issued share capital.

MTN Zakhele’s share price has performed well, and even managed to reach a high of about R144 in June. This is great value not only for initial investors who bought the shares at R20, but also investors who got in when trading started in January. In the first two days the share price reached R80.

Analysts had put the value of the MTN Zakhele between R120 and R143 and a report by investment banking company UBS estimates the share was worth R137 based on the 4% stake it holds in the MTN Group, less the debt the scheme has paid.

The underlying appreciation in MTN shares on the main board of the JSE as well as MTN’s strength in other African markets is what makes the MTN Zakhele shares valuable, according to the report.

The market capitalisation (the market value) of MTN Zakhele share trading, since it started, is R9.4 billion.

The share price has dipped in the last few trading sessions, but has stayed above R110, which is still higher than when trading began.

Rival mobile operator Vodacom started trading its BEE shares, YeboYethu, in February this year, about a week after Zakhele.

The scheme, launched in 2008, allowed black investors to buy shares, an equivalent of 3.44% in Vodacom SA, for R25 a share.

When trading started in February, the share price reached R40, which is higher than what investors initially bought shares for.

The share price has been climbing since then and in May it reached a high of R78.95. Currently the share price is at about R68 – still higher than the initial trades.

The Yebo Yethu share price has also surpassed analysts’ expectations as they valued the share price at between R49 and R56 per share.

While both operators are operating in tough, competitive market conditions, analysts agree that this is made up for by the opportunities, especially in the rapid growth of data. Clearly, BEE investors can also see the value in the two shares.

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