MTN in a wrangle over sale of R6bn stake

The source of the disagreement is the interpretation of the company's
licence conditions, writes THABO KOBOKOANE

CELLULAR phone network MTN and the communications department are in
dispute over the sale of 40.5% of MTN, a stake worth more than
R6-billion.

MTN chairman Nthato Motlana confirmed this week that Cable & Wireless
(C&W), the UK-based telecommunications giant, would dispose of its 25%
interest.

Also up for sale is the 15.5% of MTN held by US telecoms group SBC
Communications. SBC is now a major shareholder in Telkom, which owns
MTN rival Vodacom, and has been instructed by the Competitions Board
to sell.

C&W announced in November that it would divest its global investments
in which it had no strategic control, but has not yet confirmed its
stance on MTN.

The dispute between MTN and government, represented by the
communications department, centres on the allocation of MTN shares to
black empowerment companies.

Government has proposed to combine both the C&W and SBC stakes into
one and apportion the 40.5% between an international telecoms partner
(20%), existing MTN shareholders (10%), and black empowerment
companies (10.5%).

Existing shareholders, who have pre-emptive rights on both shares,
however, are keen to see the two handled separately with the C&W stake
offered to an international partner to inject capital and technical
expertise. The SBC stake would then be split between existing
shareholders and black empowerment entrants.

Motlana, who represents SA's largest black-controlled group, Nail, on
the MTN board, confirms that shareholders would prefer to separate the
stakes.

"We want to sell the entire 25% C&W stake to a foreign partner with
the SBC holding devoted to shareholders and empowerment groups," he
says.

MTN has already met a number of international players - including
Telia of Sweden and both Italian and Portuguese state-owned telecoms
companies - to discuss the sale.

The director-general of the communications department, Andile Ngcaba,
denies that he has a dispute with MTN. "We are neither a buyer nor a
seller of the stake. But we control the licence, which gives us an
obligation to ensure that MTN remains in SA hands and that black
empowerment partners are introduced."

Motlana says shareholders, SBC, C&W and government will meet later
this month to discuss the proposed sale.

The dispute is a continuation of the debate between government and MTN
shareholders over the interpretation of the MTN licence.

Government argues that it has pre-emptive rights over MTN in terms of
MTN's licence conditions, but MTN says the conditions were amended
when SBC bought its 15.5% interest in 1995. The dispute is likely to
delay and complicate the sale of these two portions.

Excluding SBC and C&W, the other MTN shareholders are Transnet (20%),
M-Cell (29.5%) and Nail (3.5%). Nail's interest is held through its
70% stake in Nafcom. Nafcom has a 44.7% interest in Naftel, which in
turn holds a further 10% of MTN.

Nail is keen to increase its stake in MTN by about 10%. Government's
proposals, if they stand, could scupper these plans.

Using the government model, it seems probable that Transnet and Nail
would acquire 5% each as existing shareholders. This will effectively
increase Nail's interest to 8.5%. Apparently the black empowerment
interests have been split between a Rethabile-led consortium,
acquiring 5%, a Safika-led one with 3.5%, and an unnamed consortium
acquiring the remaining stake.

But this could change depending on what transpires between government
and MTN shareholders over the process to be followed in this
transaction.

MTN is unlisted, but using M-Cell's share price (M-Cell has a 29.5%
interest in MTN), the cellphone network provider could be worth
R14-billion and SBC and C&W's combined stake R6-billion.

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30-06-2003

Johnnic's Headline Earnings up 91% and Attributable Earnings up 242%

Johannesburg: Johnnic Holdings Limited ("Johnnic"), one of South
Africa's leading black empowerment companies, today announced
impressive results for the year ended 31 March 2003 with attributable
earnings growing 242% to R961,7 million (last year: R281,2 million)
and headline earnings up 91% to R991,4 million (last year: R520,1
million).

On a cents-per-share basis, the attributable earnings and headline
earnings increased 240% and 90% respectively to 585 cents (last year:
172 cents) and 603 cents (last year: 317 cents).

In December 2002, Johnnic agreed to terminate its voting pool
agreement with Transnet Limited ("Transnet") and waive its pre-emptive
rights over Transnet's MTN Group Limited ("MTN") shares, in favour of
the MTN management.

"We terminated the Transnet voting pool agreement and waived our
pre-emptive rights over the MTN shares in order to support MTN
management's acquisition of Transnet's stake in MTN. This was part of
our agreement to bolster empowerment within MTN ahead of the unlocking
of value within Johnnic," explains Jacob Modise, Johnnic Chief
Operating Officer.

As a result, Johnnic relinquished control over MTN in December 2002
and ceased to consolidate the MTN results from 1 October 2002.

"Pro forma results have been published to enable meaningful comparison
between current year and prior year published results. MTN was
consolidated for the first six months of the year and equity accounted
for the remaining six months. This has had no effect on the total MTN
earnings accounted for by Johnnic," explains Christine Ramon, Johnnic
Financial Director. MORE

On a like-for-like basis, revenue grew 44% to R12 142,5 million (last
year: R8 404,8 million), and Ebitda and profit from operations
increased 69% and 96% respectively to R2 902,4 million (last year:
R1716,5 million) and R1 612,5 million (last year: R824,5 million).

MTN contributed, by a large measure, to the sterling earnings growth
in Johnnic. Johnnic's share of headline earnings from MTN grew 95% to
R868,2 million (last year: R444,5 million) whilst the earnings from
the entertainment and media business grew only 8% to R98,2 million
(last year: R91,1 million).

Johnnic undertook a number of disposals during the year and subsequent
to year-end which included the unwinding of the MTN Special Purpose
Vehicles that realised R220 million, the sale of 1,6 million MIH
Limited shares realising R65 million, various property disposals for
R82,3 million as well as 32,6 million MTN shares for R394,5 million.

The proceeds from these disposals were used to reduce the holding
company debt from R429 million to R65 million at year-end and nil
subsequent to year-end; settle part of Gallagher's long-term and
short-term debt of R140,5 million; as well as change the collateral in
respect of Suncoast Casino's obligations from MTN shares to cash in
the amount of R192 million.

"We are delighted to report that the holding company is now completely
debt-free. In addition, Johnnic is also sitting with 40 million MTN
shares that are now worth over R600 million to cover a R300 million
corporate guarantee for the Suncoast Casino and ongoing working
capital requirements of the company," says Modise.

Johnnic recently unbundled a significant portion of its shareholding
(31,9%) in MTN, providing Johnnic shareholders with a direct
investment in MTN. This move was largely driven by the Group's
strategy to unlock shareholder value and follows the enhancement of
empowerment within MTN. The convergence strategy that underpinned
Johnnic's focus of telecommunications, media and entertainment had
matured and no longer required a central control structure. MORE

"We are currently in the process of redefining our strategy following
the unbundling of our shareholding in MTN. This process will include
the finalization of the various options open to Johnnic to eliminate
the pyramid structure created by the unbundling relating to Johnnic
and its shareholding in Johnnic Communications Limited," says Modise.

"The recent recovery in the MTN and Johnnic share prices is
encouraging. Johnnic shareholders, who are also now MTN shareholders,
will benefit from the strong performance of the underlying businesses
that are represented by their shareholdings," concludes Modise. ENDS

Issued by:
Busi Pilane, Johnnic PRO, tel: 011 266-3109, cell: 083 380-3121

For further information, please contact:
Jacob Modise, Johnnic COO, tel: 011 266-3101, cell: 083 287-3385
Christine Ramon, Johnnic FD, tel: 011 266-3104, cell: 083 446-3341