R3bn cut sees MTN’s share price drop
MTN’s share price fell 2% to R133 yesterday morning after it warned that an expected R6billion profit from a deal with cellphone tower operator IHS would be cut by R2.8-billion.
MTN said the R6-billion it had booked in its interim results from the deal had been reduced to R3.2-billion by a R2.8-billion loan agreement in the second half of its financial year.
In February, MTN exchanged cellphone towers it owned in Nigeria in a partnership with IHS, called Interco, for a 29% stake in an enlarged IHS. This deal included a $231-million (about R2.8-billion) shareholder loan which MTN said had now been assigned to IHS.
“The combination of the profit from the exchange of Interco shares for IHS shares in the first half of the 2017 financial year and the loss on assignment of the shareholder loan in the second half of the year has a combined positive impact of R3.2-billion to earnings in 2017,” yesterday’s statement said.
MTN’s financial year ends in December and it releases its results in early March.
As part of the deal, IHS “has facilitated certain network volume commitments and provided more attractive terms for MTN Nigeria’s future network rollout applicable from 2018 onwards”.
“The agreement allows MTN Nigeria to continue to invest in its network more efficiently, and further simplifies MTN’s interests in IHS.
“The agreement will enable MTN and IHS to mutually benefit from continued investment and commitment to the rollout of broadband and data services in Nigeria,” MTN said. — DDC