David Shapiro, deputy chairman at Sasfin Securities, said he feels sorry for MTN’s BEE investors who were suckered into investing in the company, and have now lost a large chunk of their money (also see: MTN defends Zakhele share performance).
“Those people [BEE partners] were suckered into investing in MTN. They’re gone. They’re finished,” Shapiro said on Business Day TV.
The market cap of MTN has halved over the last few months, starting in October 2015 when the Nigerian Communications Commission fined MTN ₦1.04-trillion for not disconnecting unregistered SIMs on its network.
After negotiations with Nigerian authorities, the fine was reduced by 25% to ₦780-billion.
MTN was still not happy, and on 17 December 2015 the company announced it would fight the fine.
Earlier this week, the case was adjourned to allow MTN and the Nigerian authorities to reach a settlement.
Reuters reported that the Nigerian telecommunications minister Adebayo Shittu said MTN should drop its legal action over the fine to help facilitate talks about a possible settlement.
No deal in Nigeria
Shapiro said he is not confident of a deal in Nigeria, despite rumours suggesting that one is imminent.
“My contacts in Nigeria are telling me that the regulator and government in Nigeria are not bending. They are not giving up any ground there.”
Shapiro advised investors to “just stay away” from MTN if they are uncertain about the future of the company.
He said people found “more cockroaches” regarding MTN in Cameroon, referring to the country’s corruption board which stated that MTN owed nearly 52 billion CFA francs in taxes and royalties.
MTN denied these allegations, but, along with the existing fine in Nigeria, investors are losing confidence in the company.
“When something like this happens to a company, all credibility is destroyed,” said Momentum Wealth portfolio manager Wayne McCurrie.
Business Day’s Giulietta Talevi said that while the smaller shareholders suffer, “the Phuthuma Nhlekos and co made plenty of money out of this company”.
Shapiro agreed, saying that while the top execs and investors made billions of rand, the “poor empowerment people who were told to subscribe to the MTN deal have lost all their money”.
Update – 4 February 2016
Shapiro has issued a retraction and apology on Business Day TV over his comments he made about MTN Zakhele.
MTN also responded after his comments, stating that since its inception in 2010, shareholders in MTN Zakhele have enjoyed an annual compound growth of over 20%.
“An investor who had invested R100 in 2010, would now have an investment worth R293.50 today – well ahead of inflation,” said MTN.
MTN Zakhele shareholders were supported in their initial investment by MTN shareholders in the form of a R1.3-billion donation, and a further R3.2 billion in notional vendor financing.