NIGERIAN RECESSION KNOCKS NEDBANK’S ECOBANK
The recession in Nigeria and other factors saw Ecobank suffering a loss last year, but Nedbank will keep its stake in the Pan-African bank, despite having to take a R3.8 billion write-down on the asset.
Nedbank said that the performance of Ecobank – in which Nedbank has a 20% stake – was hurt by weaker conditions in west Africa and currency volatilities, particularly in Nigeria where the economy went into recession for the first time in 25 years.
Foreign currency liquidity constraints, especially in Nigeria, were also an issue that hit Ecobank, which is present in 36 African countries and has its headquarters in Togo.
Nedbank has a 20% stake in Ecobank, which was bought for $493 million (R6.5 billion) in 2014.
The write-down reduced the holding value of Nedbank’s Ecobank 1996, partly due to a R10.5 billion Nigerian fine. In 2015, MTN generated profit of R23.6 billion.
Chris Maroleng, MTN spokesperson, said that 2016 had been “an incredibly challenging year for MTN”.
In October 2015, the Nigerian government fined MTN $5.2 billion (R68 billion) for failing to disconnect up to 5 million unregistered stake to R4 billion. However, Nedbank said at the end of December the Ecobank stake’s market value was R2.4 billion.
Nedbank CEO Mike Brown said that the bank remained optimistic about the long-term prospects for Ecobank, which makes up about 3% of Nedbank’s market value.
“Conditions in the key markets in which Ecobank operates are currently expected to remain difficult in 2017, before improving in 2018 and beyond,” Brown said.
In another development, Nedbank this week launched a new brand identity for the first time since 2010. A Nedbank “brand repositioning” document said that the new brand identity was being launched owing to a “fast-changing consumer and competitive landscape” and followed an 18-month process. The new tagline is “see money differently”. SIM cards in that country, before settling the fine in June last year.
To restore confidence, MTN is bringing in a new CEO and a new chief financial officer (CFO).
On March 13, Rob Shuter will be joining MTN from Vodacom as its new CEO while Ralph Mupita will be joining MTN from Old Mutual on April 3 as CFO.
MTN is also looking to inspire confidence with new board appointments.
Nhleko said that the group was still looking to list MTN Nigeria and close a “localisation deal” in Ghana that will see 35% of MTN Ghana sold to Ghanaian shareholders.
For the listing of MTN Nigeria to proceed, Nhleko said spectrum and other issues in the country needed to be resolved.
In Iran, MTN has a stake in Snapp, which is a smartphone taxi application and rival to Uber.