MTN boss’s R1bn bet
Nhleko’s total exposure in mobile provider jumps to R29bn
BACK IN MAY 2006 – when cellphone operator MTN was trading at around R50/share – CE Phuthuma Nhleko committed R245m of his own cash in a forward purchase contract on more than 4m MTN shares. That was a bold step that showed unrivalled confidence and which earned him the respect of the investing community while many doubted his wisdom. The market proved him right.
Nhleko has done it again. Last week he committed more than R1bn to MTN’s shares. The company disclosed to the market that Nhleko had entered into a “restructured” forward buying agreement with a commercial bank in respect of 4,1m shares at an option price of between R122,34 and R129,09/ share. The options expire in November next year. Another transaction in which Nhleko bought a call option at R102,57/share and sold at R150/share in 5m shares expires in March 2009.
His buying gives Nhleko a total minimum exposure of R1,02bn on the 9,1m shares – an average price of R111,54/share against the current price of R101/share. The put strike price average is R140,52/share on both transactions, while the sale price would be R150/share on the March 2009 option. Nhleko secured himself a forward price of R98,25/share on the November 2009 leg of the option.
The size of the transactions again cements Nhleko’s position as the largest individual shareholder in the company he leads. Should he settle and take delivery of all the shares, Nhleko will be a proud owner of 28,6m shares (as at end-December 2007 he indirectly owned 19,4m MTN shares) currently worth R29,1bn. Compare that with MTN’s market capitalisation of R193bn to talk about “skin in the game”.
As mentioned last week, David Rivkind and Dean Suntup, of Blue Label Telecoms, have become the usual suspects on the buying side of the directors’ dealings table. They are both respectively chief financial officers of the holding company and a major subsidiary. For four consecutive weeks now Rivkind and Suntup have been buying shares in the 500c range. Last week they put a combined R9,4m in Blue Label’s shares (average: 563c/share), taking their respective shareholdings to more than 3,5m each.
After listing in November last year at 675c/share, Blue Label briefly went as high as 929c before embarking on a steady slump to a low 400c/share in the first week of October.
So why are Rivkind and Suntup buying at those levels? “Both of us weren’t vendors when the company was put together prior to the listing,” says Rivkind. They didn’t receive any shares at listing either. Rivkind says they’re buying into Blue Label “to align our interests” with the other board members. “The share offers real value at these levels,” says Rivkind.
With operations in India, the Democratic Republic of Congo, Mozambique and now Mexico outside the SA market, Rivkind sees “only good things” going forward. “We anticipate growth in the cellphone and prepaid airtime distribution market and we’ve aligned ourselves with that growth.”
Blue Label’s directors weren’t the only buyers of significance over the past week. In fact, they were only some of many who saw the buying opportunities offered by the crashing equity markets. With the exception of only two sales worth R650 000, the net R26m purchase (except Nhleko’s options) was again a vote of confidence and a case of seeing opportunities while the rest are fearful.
A combined R10m buy by directors of both synthetic fuels producer Sasol and casino and resort operator Sun International were the other major transactions in the week. Sasol’s Christine Ramon and a director of one of the company’s subsidiaries were responsible for R5,9m of that.
Making the call. Phuthuma Nhleko