MTN’s decision not to declare a dividend could affect the ability of the listed special empowerment vehicle to pay scheduled dividends
MTN Zakhele Futhi, the special-purpose empowerment vehicle of Africa’s largest mobile operator, says it is in talks with MTN over that company’s decision not to pay an interim dividend, which could affect its ability to pay scheduled preference dividends.
The full effect of this is being determined, with the empowerment vehicle saying it was in “discussions with MTN and the preference share funders to find solutions to mitigate the impact”. Preference shares were subscribed for by third-party debt providers on MTN Zakhele Futhi’s establishment, and dividends are treated as an interest expense.
In its results for the year to end-December, MTN Zakhele Futhi said it had used R276,9m of its dividend income for the early redemption of preference shares, leaving a balance of just less than R1.2bn.The current MTN Zakhele Futhi scheme listed on the JSE in November with 77-million MTN shares, or about 4% of its issued share capital. This was worth about R4.4bn on Monday afternoon.
MTN said on Friday it would not be paying an interim dividend for its half year to end-June, citing uncertainty around the Covid-19 pandemic.
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