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MTN raises R14bn in “fire sale”

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MTN has revealed that it has sold off assets worth R14-billion in the past year.  The sales are positioned as part of an Asset Realisation Programme (ARP) announced in March 2019. It is intended to simplify the MTN portfolio, reduce debt and risk, and improve returns.

In May last year, it announced that it had sold its stakes in investment fund Amadeus and travel platform Travelstart to HarbourVest, a global private equity firm, for R1,2-billion. In June, it announced in its interim results to June 2019, it sold a shareholder loan in ATC Ghana to American Tower Corporation for R900-million.  

It reported at the time that its tower businesses included 49% holdings in both ATC Ghana and ATC Uganda. During the first half of the year, it “saw a strong contribution from both of R58-million in June 2019”. 

Now, says MTN, it has concluded an agreement to dispose of its 49% equity holdings in the Ghana and Uganda Tower Company investments to a subsidiary of American Tower Company for $523 million, or approximately R7.3-billion. The deal is expected to close by the end of March 2020. 

MTN also confirmed today that MTN Nigeria has completed the redemption of preference shares, with MTN Group receiving US$315 million ( around R4,4 billion) in December 2019. 

“Following the completion of these transactions, MTN will have realised proceeds of approximately R14-billion within the first 12 months of this programme,” said group president and CEO Rob Shuter. “Realising proceeds from simplifying the group remains a major strategic objective and we expect further progress in this program in 2020.”

MTN’s market capitalisation, as of 2 January 2020, stood at R157,77-billion. The scale of the asset sale, representing close to 10% of market cap, suggest an urgency in addressing issues facing MTN during the first half of 2019, such as slowing growth in South Africa in the first six months of 2019, when MTN SA posted 3.3% growth, In Nigeria, the initially successful listing of e-commerce platform Jumia on the New York Stock Exchange hit a brick wall. Trumpeted as Africa’s first unicorn after it achieved an initial market cap of more than $1-billion, the share price quickly wavered when it was revealed that the company – % owned by MTN – had built up losses of more than $1-billion since 2012.

At the time of listing, MTN had stated its intention to reduce its stake in Jumia. However, it is likely that the slump in the share price, which crashed from above $40 to a low of $5, and currently trading at below $7, has put that particular windfall on hold.

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