MTN may off­load stake in IHS Tow­ers

The Star Late Edition - - COMPANIES - Di­neo Faku

MTN SHARES inched up slightly in early trade on the JSE yes­ter­day, reach­ing R134.66 each on news that the mo­bile gi­ant was plan­ning to off­load its 29 per­cent stake in IHS Tow­ers that is val­ued at R27 bil­lion.

IHS Tow­ers, the big­gest in­de­pen­dent tower op­er­a­tor in Africa, Europe and the Mid­dle East, is re­port­edly plan­ning an ini­tial pub­lic of­fer­ing (IPO) in New York later this year.

Peter Takaen­desa, a port­fo­lio man­ager at Cape Town-based Mer­gence In­vest­ment Man­agers, said of­fload­ing the IHS Tow­ers stake made sense for MTN.

“Firstly, there is no real rea­son why MTN should re­main in­vested in IHS Tow­ers if it is listed. It is bet­ter for a tower com­pany to be owned by an in­de­pen­dent op­er­a­tor as op­posed to a tele­coms com­pany. Se­condly, MTN has high gear­ing on its hold­ing com­pany bal­ance sheet at the mo­ment and its IHS Tow­ers share­hold­ing is not re­flected in the share price. At a good price for IHS, MTN can sell that stake and re­duce its debt.”

Last week, MTN said its net debt had in­creased to R57.1 bil­lion in the year ended De­cem­ber from R51.9bn for 2016.

It at­trib­uted the in­crease to lower cash gen­er­ated from op­er­a­tions off­set by R6.5bn repa­tri­ated from Iran, and an in­crease in head of­fice net debt.

Re­ports have emerged that MTN would look to sell its stake if the tower op­er­a­tor went ahead with the share sale and the val­u­a­tion was ap­pro­pri­ate.

“It is not strate­gic to lock up so much cap­i­tal,” Ralph Mupita was quoted as say­ing. “While MTN’s stake in IHS Tow­ers is im­por­tant, it’s been ear­marked by the com­pany as an as­set for sale.”

Pre­vi­ous re­ports claimed that He­lios Tow­ers, one of the largest sub-Sa­ha­ran telecom­mu­ni­ca­tions tower op­er­a­tors, planned an IPO in early April to al­low share­hold­ers such as Soros Fund Man­age­ment to re­duce their stakes.

Last year in Fe­bru­ary MTN ex­changed its 51 per­cent in­ter­est in Tower In­terCo, Nige­ria’s telecom­mu­ni­ca­tion op­er­a­tor, for an ad­di­tional stake in IHS. This re­sulted in an in­crease in the stake to 29 per­cent from 15 per­cent.

It said at the time that the trans­ac­tion en­abled it to sim­plify its tower own­er­ship struc­ture and di­ver­sify its ex­po­sure across the IHS Group, which op­er­ates in sev­eral mar­kets in Africa.

“The trans­ac­tion will bet­ter en­able MTN to crys­tallise value for MTN’s share­hold­ers in the fu­ture. The in­vest­ment in IHS Group al­lows MTN to ben­e­fit eco­nom­i­cally from its pre­vi­ously owned pas­sive in­fra­struc­ture and con­tin­ued net­work in­vest­ment,” it said last year.

Si­bonginkosi Nyanga, an an­a­lyst at Mo­men­tum Se­cu­ri­ties, said if MTN de­cided that IHS Tow­ers was not a core busi­ness and costly to run, of­fload­ing the stake dur­ing an IPO was a wise move.

MTN shares de­clined 2.18 per­cent on the JSE to close at R130.49.

Trans­for­ma­tion ini­tia­tives to ben­e­fit lo­cal ve­hi­cle sup­pli­ers: page 18

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