The put options in respect of subsidiaries arise from arrangements whereby certain of the non-controlling shareholders of MTN Nigeria Communications Limited and MTN Afghanistan Limited have the right to put their shareholding in the respective companies to MTN Nigeria and MTN (Dubai) Limited, respectively.

The put options on the Group’s own equity resulted in the recognition of a liability at fair value. Subsequent to initial recognition, the liability is measured at amortised cost using the effective interest method. To the extent that the put options are not exercisable at a fixed strike price, the estimated future cash flows change as the fair market value of the underlying equity changes. As the estimated future cash payments change, the net carrying amount of the financial liability will change accordingly. This change in the carrying amount is recognised in profit or loss.

The fair value of the MTN Nigeria put option is estimated based upon a comparison of valuations ascribed to the underlying equity by research analysts, publicly observed trading levels of comparable companies, transaction values paid in comparable transactions, and discounting of all future cash flows of the business to derive a fair present value. The valuation techniques include assumptions in respect of future cash flow growth, discount factors and terminal values.

The fair value of the MTN Afghanistan put option, in terms of which the IFC has the right to put 9,1% of their shareholding obtained during the current financial year to MTN Dubai, is determined based on an EBITDA multiple, as determined in accordance with the terms and conditions of the contractual arrangement. This put option is currently not exercisable.

In addition, the previously disclosed option in terms of which MTN had a put option and the non-controlling shareholders a call option in respect of 1% of the issued share capital of MTN Cyprus Limited, was exercised during the current financial year for an amount of
R5,4 million (note 45.1). The change in shareholding did not result in a loss of control.