Notes to the Group financial statements | Note 31
for the year ended 31 December 2010
 
31. COMMERCIAL COMMITMENTS
 

MTN Zambia Limited

The licence issued by the Zambian Communications Authority (ZCA), a body corporate established under the provisions of the Telecommunications Act No 23 of 1994 Laws of Zambia, requires that ten percent (10%) of the issued share capital of MTN Zambia Limited be held by the Zambian public. The approval given by the ZCA for the company’s purchase of 100% of the share equity was on the basis that 10% should be housed in a special purpose vehicle (SPV) for the beneficial ownership of the Zambian public. Previously it was reported that the ownership of 10% by the SPV, already formed, and ultimate placement with Zambian public was concluded.

Irancell Telecommunication Service Company (Proprietary) Limited

The investment in Irancell is subject to a number of sovereign, regulatory and commercial risks, which could result in the Group failing to realise full market value for its investment should it be required to dispose of any portion thereof. In this regard, 21% of Irancell is required to be offered to members of the Iranian public within approximately three years from the date of the licence. Such offering could have a proportional dilutory effect on the Company’s 49% shareholding, effectively reducing its shareholding by 10,3% to 38,7%. The substantial terms and conditions of this commitment are yet to be finalised.

Eastern African Submarine Cable System (EASSy)

The Group, together with various other parties, has entered into a construction and maintenance agreement for the Eastern Africa Submarine Cable System (EASSy) to address the growing demand for international bandwidth in Africa. The Group’s commitment in respect of the contract amounts to USD40 million which has been settled in full on 31 December 2010 (December 2009: USD30,9 million).

Europe-India Gateway (EIG) and West Africa Cable System (WACS)

The Group has entered into an agreement with several other parties to construct a high capacity fibre-optic submarine cable system. The Group’s commitment in respect of the contract amounts to USD144,8 million of which USD89,4 million has been paid at 31 December 2010.