South Africa: Nhleko bags R424m in MTN share sale

Mergers, Acquisitions and Financial Results

MTN Group CEO Phuthuma Nhleko has offloaded more than 3,2m shares in the mobile telecommunications group. The shares have netted Nhleko a cool R424m.

The sale comes just months before Nhleko is due to leave the group. He’s due to step down by March 2011, though MTN’s board is still to name his successor.

Nhleko’s sale of shares, concluded at R131,66/share, was done in part to settle his obligations “arising from the early termination of a transaction concluded with a commercial bank”.

At the same time, one of Nhleko’s top lieutenants, MTN SA MD Karel Pienaar, has sold 122 000 shares worth more than R15,4m.

A leading telecommunications analyst, who declines to be named as he says he has to retain good relations with MTN’s management team, is “slightly concerned” about Pienaar’s decision to sell shares.

However, the analyst says MTN’s share price is trading at its best levels since mid-2008, and both Nhleko and Pienaar may have seen this as a good opportunity to diversify their portfolios.

Nhleko, in particular, may be keen to reduce his exposure to MTN given that from next year he will no longer be leading the group.

But the analyst there is a possibility Indian telecoms group Bharti Airtel played a part in both men’s decision to sell now.

Bharti, which acquired pan-African mobile operator Zain in March, is expected to slash call rates in Nigeria, possibly as soon as next week.

Nhleko earlier this year rubbished suggestions that Bharti posed a threat to MTN in Nigeria, describing them as an “exaggeration and oversimplication”.

But Bharti has already cut prices in a number of African markets, including Kenya, and there are worries that a price war in Nigeria could eat into MTN’s profit margins.

Nigeria is MTN’s largest and most profitable market.