MTN shares rise by more than 18% on the JSE
Company eyes R15 billion in push to reduce debt
MTN, AFRICA’S telecoms giant, soared 15 percent on the JSE on plans to raise R15 billion from asset sales towards reducing debt as it delivered on growth targets in 2018, despite headwinds in Nigeria and sanctions in Iran.
MTN jumped the most since August and exchanged hands at R87.95 a share at 3.22pm after the group said it would cash in non-mobile assets, including investments in tower companies and e-commerce ventures, following a review of the portfolio.
The shares closed 18.06 percent higher at R89.80 on the JSE yesterday.
Group chief executive Rob Shuter said at least R15bn in asset realisations would be made over the next three years, excluding any proceeds from IHS Towers.
“Proceeds will be used to reduce holding company debt,” Shuter said.
MTN owns 29 percent in IHS Towers, Africa’s largest telecom towers company, which is valued at R23.4bn.
Shuter also said MTN was selling its controlling stake in Mascom Wireless Botswana, which had been identified as a non-core asset, to Econet Wireless for $300 million.
“Although towers are an important operational component of the business, the investments in the existing tower companies are not viewed as long-term strategic holdings of the group,” he said.
The group boosted shareholder confidence, saying it was committed to targeting growth of 10 to 20 percent in the dividend. “For 2019 this is likely to be towards the end of this range,” Shuter said.
The group declared a final dividend of 325 cents a share, bringing the dividend for the year to 500c a share.
MTN also significantly improved its return on investment target to 20 percent over the medium term from 11.5 percent in 2018.
Peter Takaendesa, a portfolio manager at Cape Town-based Mergence Investment Managers, said MTN’s management was delivering on their strategic objectives, paving the way for market share gains and improved profitability in the short to medium term.
“The execution of the strategy has improved under this management. They are investing for growth, and over three to five years I expect MTN to become one of the fastest-growing emerging market telecoms players,” said Takaendesa.
Group revenue increased by 102 percent to R134.5bn and service revenue increased by 10.7 percent to R124bn, supported by growth in Nigeria, Ghana, South Africa and Uganda.
“If you remove the impact of the strong rand, revenue would have increased and we will see much better growth as the rand weakens,” said Takaendesa.
Group subscribers grew by 16 million at the end of December to 233 million.
In South Africa, MTN clawed back market share with subscribers jumping 5.7 percent to 31.2 million in 2018 and data revenue increasing 12.7 percent.
In Nigeria, Africa’s most populous country, subscribers increased by 11.3 percent to 58.2 million in 2018 and data revenue increased 40.1 percent.
MTN sank to a nine-year- low on the JSE in 2018 after running into problems in Nigeria and has since reached a settlement with the Central Bank of Nigeria on the alleged improper repatriation by MTN Nigeria of $8.1bn between 2007 and 2015.
The dispute between MTN Nigeria and Nigeria’s attorney general is yet to be resolved and will come before the Nigerian courts on March 26.
Shuter said MTN Nigeria planned to list shares on the Nigerian Stock Exchange in the first half of 2019.
In Iran, the re-introduction of US sanctions resulted in material currency depreciation and increased inflationary pressures and no further cash was repatriated in the second half.
“At December 31, 2018, group receivables of R2.8bn remained in Iran,” Shuter said.