Notes to the Group financial statements | Note 18
for the year ended 31 December 2010

          Number of shares  
          December
2010
Rm 		      December
2009
Rm		  
18.   ORDINARY SHARES AND SHARE PREMIUM                
    Ordinary share capital                
    Authorised     2 500 000 000       2 500 000 000  
    Issued     1 884 529 317       1 840 536 491  
    On issue at beginning of year     1 840 536 491       1 868 010 304  
    Newshelf share buy-back     —       (243 500 011)  
    Shares issued – PIC     —       213 866 898  
    Options exercised     528 062       2 159 300  
    MTN Zakhele transaction     43 445 564       —  
    On issue at end of year     1 884 510 117       1 840 536 491  
    Options – MTN Zakhele transaction*     (29 994 952)       —  
    On issue at end of year – excluding MTN Zakhele transaction     1 854 515 165       1 840 536 491  
    Share capital                
    Balance at beginning of year     *       *  
    Additions     *       *  
    Balance at end of year     *       *  
    Share premium                
    Balance at beginning of year     44 297       23 905  
    Newshelf share buy-back     —       20 356  
    Options – MTN Zakhele transaction*     1 294       —  
    Options exercised     11       36  
    Balance at end of year     45 602       44 297  
 

* Due to the call option over the NVF shares, these shares, although legally issued to MTN Zakhele, are not deemed to be issued in terms of
   IFRS and are shown as such in the share capital reconciliation.

MTN Group share option scheme and share appreciation rights scheme

The exercise of options and resulting share trades can be viewed under directors’ share dealings on page 102 of the directors’ report. All disclosure as required has been included in the directors’ report.

MTN concluded its broad-based economic empowerment transaction “MTN Zakhele” during October 2010. The transaction is designed to provide long term, sustainable benefits to all BEE participants and will run for a period of six years. Over 122 552 applicants subscribed for shares and were successful.

The total cost of this transaction was R2 973 million which was recognised as a once-off charge in the income statement for the year. This charge includes the once-off IFRS 2 Share-based payment transaction charges for the notional vendor finance of R1 382 million, the employee share option plan of R171 million and a donation of R1 294 million. Transaction costs amounted to R126 million.

The donation was used to subscribe for 12 045 412 shares at the price of R107,46. Through the notional vendor finance, MTN issued 29 994 952 shares (NVF shares) to MTN Zakhele at par value. MTN has a call option over these shares. The value of the call option is R1 382 million and was determined using the Monte Carlo valuation model. The significant inputs into the model were the market share price of MTN shares of R128,85 at the grant date, being 14 October 2010, volatility of 40,2%, dividend yield of 4,1% and expected option life of six years and an annual risk free rate of 7,08%.