Zakhele trading takes off

2013-11-24 14:00

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MTN’s BEE scheme goes live with over-the-counter dealings this week

MTN’s black empowerment scheme Zakhele finally begins restricted over-the-counter trading tomorrow.

MTN Zakhele has been busy the past few weeks educating its shareholders so trading can begin just before the festive season.

The cellphone company giant launched its BEE scheme in 2010, with an initial minimum investment period of three years followed by another three years of restricted trading between black investors.

Originally, shareholders bought their shares at only R20 and the rest was financed through notional vendor financing from the company, donations from it and funding from third-party lenders.

Since the implementation of the scheme, the company’s share price has performed well, increasing by 64%, according to MTN Zakhele chairperson Thulani Gcabashe.

“The success of MTN Zakhele is dependent on the performance of the MTN share price, as well as the ongoing receipt of dividends to service its funding commitments. Furthermore, the implementation of the refinancing approved at the July 2013 AGM has improved the financial position of MTN Zakhele by replacing more expensive funding with cheaper funding,” said Gcabashe.

This growth from the share price and increased dividends has seen the net asset value of MTN Zakhele skyrocket.

MTN Zakhele had a net asset value of about R8.5?billion as at June 30 2013, up from R3.4?billion in 2010. This puts the net asset value per share before trading at R104.63.

A report by investment banking company UBS estimated that an MTN Zakhele share is worth about R137 based on the 4% stake it holds in MTN Group less the debt the scheme has already paid.

But the report also noted the “relative illiquid nature of the instrument”, a common criticism of over-the-counter trading.

The platform does not attract as many people and may make it difficult for the share price to increase.

But Gcabashe said they had invested in educating their shareholders on trading and wealth objectives of owning shares.

On Thursday, hundreds of MTN Zakhele shareholders came in droves to the Nasrec Expo?Centre to learn how to register and more about trading on the platform, and also to complain.

Aroka, a shareholder City Press spoke to, said he bought MTN Zakhele shares because he had an extra bit of money and didn’t know what else to do with it.

He said he was excited about learning to trade and hadn’t made up his mind about what to do with the shares.

Another elderly shareholder told City Press that she had come all the way from Soshanguve in Pretoria to find out how trading over the call centre would work.

She said she had tried to call the call centre number but there was no answer and she was forced to come and find out.

But Simon Mohapi, a financial adviser who was giving the talk, assured shareholders and potential shareholders that the cellphone company was aware of this and had increased capacity at its call centre.

One of the bones of contention by other shareholders was the fact that the call centre number was only free for MTN customers and shareholders on other networks paid normal rates.

“MTN is just trying to make money off of us,” complained one angry shareholder.

Even though that through

the trading platforms, the price struggles to reach the net asset value per share, investors have traditionally received more than they paid for it.?MultiChoice’s Phuthuma Nathi shares were sold to BEE shareholders at R10 each, and are now trading at about R80, but still fall short of the net asset value per share, which is more than R100.

African Bank’s Eyomhlaba BEE trading platform lists the share price at about R6, and while this is more than the R4 that investors paid for it, it also falls short of its net asset value of R12.64.

But Gcabashe said the extent to which the share price goes depends on shareholders, and the education seminars should go a long way in helping.

“Trading of the shares will depend on demand and supply. Shareholders need to decide on their own wealth-creation plans and what they want,” he said.

MTN rival Vodacom has also begun registration for their YeboYethu BEE share trading platform, which opens in February next year.

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