Photo by: Bloomberg
With a greater-than-expected 2015 dividend pay-out from MTN Group, transformation and empowerment shareholder and investment group MTN Zakhele continued to decrease its debt.
The 4% stake in MTN, the group’s only asset, generated a R964.6-million dividend income for the year ended December 31, 2015, a rise on the R836.5-million paid out in 2014, enabling Zakhele to repay debt in excess of the budgeted repayment schedule.
“This income was used firstly to pay the company’s permitted operational costs and tax. The remainder of the dividend income was used to pay dividends owed to preference shareholders and to reduce Zakhele’s notional vendor financing (NVF),” chairperson Sindi Mabaso-Koyana said.
The NVF funding was partially settled as Zakhele increased its payment from R582-million in 2014 to R689-million in 2015.
During the period under review, preference shareholders were paid R211.3-million, an increase on the R201.8-million paid in the prior year.
Meanwhile, Zakhele, with some 87% of shareholders holding fewer than 500 shares each, in November applied to list its shares on the revised black economic-empowerment board of the JSE as it transitioned from an over-the-counter platform.
“Prior to the listing on the JSE, MTN Zakhele shares worth R373-million changed hands. After the listing on the JSE, shares worth R35.5-million were traded in November and December 2015. A total of 21 000 trades took place across both platforms. This compares to a trading value in 2014 of R902-million in more than 42 000 deals,” said Mabaso-Koyana.
NIGERIA HIT
MTN Zakhele’s share price plunged 32% year-on-year from R108.50 to R73.90 last year, resulting in a loss of R871.9-million in 2015, as regulatory pressures in Nigeria pushed MTN Group’s share from R221.41 in 2014 to R132.89 in 2015.
“However, it is important to note that the share price at the end of 2015 still represents an almost 270% gain on the initial investment of R20 a share investors paid for each MTN Zakhele share in 2010,” Mabaso-Koyana pointed out.
Meanwhile, Zakhele expected a dividend pay-out of R625.5-million in April from MTN Group, as MTN declared a dividend of R13.10 for the year.
Despite the numerous calls from Zakhele shareholders to pay dividends, the funds would be used to repay debt.
“Acting in the best interests of shareholders, the directors will continue to use all extra cash to repay the company’s debt and so steadily reduce the cost of this debt. It remains the board of directors’ intention to maintain this approach and to ensure all liabilities are settled in anticipation of the scheme’s unwinding in November 2016.”
Apart from dividend income, debt repayments were expected to be financed through the sale of some MTN Group shares, the number of which would depend on the value of each MTN Group share at the time.