MTN launched the Zakhele Futhi (MTNZF) Broad Based Black Economic Empowerment (BBBEE) scheme in 2019 to empower black investors, including taxi operators, by offering shares at R20 each.
However, after MTN unexpectedly announced the scheme’s closure, many investors are now left with share certificates that will soon be worthless.
MTN CEO Ralph Mopita said the MTNZ board independently
ended the R10.6 billion vendor financed empowerment deal.
Mpikeleni Ndlovu, a taxi leader from KwaZulu-Natal, says he was informed about the company’s closure.
He said, “It makes little sense for MTN, a leading telecommunications company performing well in the country, to shut down the BEE scheme. But at least I got my money back that I have invested.”
KwaZulu-Natal SANTACO Manager Sifiso Shangase says he is disappointed that MTN BEE scheme has reach the end of the road for black investors.
“The complete closure of the MTN BEE component is disappointing, as it will negatively affect shareholders who had invested with expectations of future gains that now may not materialize.” Shangase said.
He added, “The dividends will likely be used to pay off debt, so investors may eventually receive much less than the true value of the BEE component as the main MTN group company keeps operating.”
Another taxi operator from Gauteng Zeph Mthimkhulu said that he had anticipated the shares purchased through the scheme would offer financial stability for himself and his family, given the inherent challenges of relying solely on income from the taxi industry
Mthimkhulu acknowledged the challenges in the taxi industry and said he chose to invest in MTN as a safer way to secure his family’s financial future compared to other options.
However, not all investors are losers in the MTNZ BEE scheme as financiers and deal arrangers recovered their investment before BEE beneficiaries received any returns.
In 2024, MTNZF received R253.5m in dividends from MTN, used R135.8m to repurchase preference shares, and spent R61.8m on operating expenses (including R38.7m for legal and professional fees), with no dividends paid to shareholders. The company plans to use R3bn from share sales to cover debt, taxes, and shutdown costs.
Financial analysts have warned that MTNZF shareholders are unlikely to recoup their initial investments. MTNZF faced increased management and related expenses, along with weak share price performance.
The BEE company will be delisted from the Johannesburg Stock Exchange (JSE), wound up and deregistered once this process is finalized.
