MTN Zakhele Futhi update

MTN has released the much anticipated Prospectus for MTN Zakhele Futhi (the new BEE scheme that will replace MTN Zakhele when it unwinds on 24 November 2016).The purpose of the MTN Zakhele Futhi Offer is to provide the Black Public with an opportunity to participate in the ownership of the MTN Group, either through the MTN Zakhele Futhi Public Offer or by continuing to participate therein through the MTN Zakhele Re-investment Offer. The MTN Zakhele Futhi offer is a part of the 2016 MTN BEE Transaction, which is sized to be approximately 4.0% of MTN's issued share capital on a Fully Diluted Basis.

Black People and Black Groups are invited to subscribe for up to 123 416 819 ordinary shares in MTN Zakhele Futhi at R20.00 per MTN Zakhele Futhi Share. The total MTN Zakhele Futhi Offer size is up to R2 468.3 million. The minimum subscription required for participation by a Cash Applicant in the MTN Zakhele Futhi Offer is 100 MTN Zakhele Futhi Shares, which amounts to a minimum subscription payment of R2 000.00.

For Cash Applicants that have applied and paid for more MTN Zakhele Futhi Shares than are eventually issued to you, MTN Zakhele Futhi will refund to you the excess amount plus interest by EFT.

If you are a Re-investment Applicant and have applied for more MTN Zakhele Futhi Shares than are eventually transferred to you, then the relevant portion of your MTN Zakhele Scheme Consideration which was not settled in MTN Zakhele Futhi Shares will remain with you and be settled to you as part of the MTN Zakhele Unwinding Scheme. As you have not paid any monies, no interest will apply to you.

The 2016 MTN BEE Transaction will be funded through a combination of:
1) Money raised from the Black Public under the MTN Zakhele Futhi Public Offer;
2) Re-investment value received from MTN Zakhele under the MTN Zakhele Re-investment, if any;
3) Notional Vendor Finance from MTN;
4) An upfront effective 20% discount being provided by MTN to the price payable by MTN Zakhele Futhi for the MTN Shares acquired by it; and
5) Third party bank funding.

Each MTN Zakhele Futhi Share has an underlying value, as at the Last Practicable Date of approximately R33.50. The market price of the MTN Shares is the most important factor affecting the value of an MTN Zakhele Futhi Share although such value is also significantly impacted by the financing obligations.

For every R2 000 you invest, MTN Zakhele Futhi will be able to make an investment into MTN Shares of about R8 000, facilitated by way of the 20% discount provided by MTN, and the funding raised by MTN Zakhele Futhi from MTN and the third party funders. This will give you exposure to a significant investment into the MTN Group and its future, for a relatively small (25%) contribution. For every R100.00 you put in, MTN and the funders will effectively put in about R301.60.

The Empowerment Period for MTN Zakhele Futhi is eight years after the date on which the MTN Zakhele Futhi Shares are issued to the Black Public, which is expected to be 23 November 2016.
You cannot sell or otherwise dispose of your MTN Zakhele Futhi Shares during the first three years of the Empowerment Period (i.e. the Minimum Investment Period). Restricted trading will be allowed during the fourth to eighth years, where you can only sell or Dispose of your MTN Zakhele Futhi Shares to eligible MTN Zakhele Futhi Shareholders. All sales and Disposals during the fourth to eighth years are subject, amongst others, to approval and BEE verification processes. You cannot Encumber (e.g. use for security) your MTN Zakhele Futhi Shares during the Empowerment Period (i.e. 8 years).

During the Minimum Investment Period, MTN Zakhele Shareholders will generally not receive a dividend. From year four onwards, while the MTN Zakhele Futhi Pref Shares remain outstanding, the dividend income earned on the MTN Shares held by MTN Zakhele Futhi in the ordinary course will be used firstly to pay or provide for permitted operational fees, costs and expenses and tax liabilities of MTN Zakhele Futhi and then a portion will be used to pay dividends and to provide a specified minimum amount per annum for settlement of the third party funding of MTN Zakhele Futhi. If funds remain, the MTN Zakhele Futhi Board has a discretion to pay up to 20% of the total dividend received from MTN as a dividend to MTN Zakhele Futhi Shareholders, subject to MTN's discretion.

The MTN Zakhele Futhi Offer opens at 09:00 on Monday, 12 September 2016 and closes at 16:00 on Friday, 21 October 2016. (Hit reply to this email if you want more information)