MTN raises about R14bn through asset sales, plans to pay off debt

MTN, through asset sales, has raised a total of about R14bn during 2019, as part of its three-year asset realisation programme.

The mobile operator announced the programme (ARP) in March 2019, at the release of its 2018 annual results. The ARP aims to reduce debt, simplify its portfolio, reduce risk, improve returns and raise capital of at least R15bn over three years, the group said in a notice to shareholders issued on Thursday.

Bloomberg in March 2019 reported that MTN disposed its 53% stake in Botswana mobile phone operator Mascom, for $300m (about R4.2bn).

Most recently MTN concluded an agreement to dispose its 49% stake in tower companies - Ghana Tower Interco and Uganda Tower Interco, to the value of $523m (about R7.3bn).

MTN expects the transaction to close during the first quarter of 2020. On the close of the transaction, MTN expects to record a profit on the disposal of approximately R6bn, the shareholder notice read.

Secondly, MTN Nigeria has completed the redemption of its preference shares - which resulted in the MTN Group receiving $315m (about R4.4bn). According to the notice, this was necessary for MTN to simplify its capital structure.

"Following the completion of these transactions, MTN will have realised proceeds of approximately R14bn within the first 12 months of this programme.

"Realising proceeds from simplifying the group remains a major strategic objective and we expect further progress in this programme in 2020," Group CEO Rob Shuter said in a separate statement issued by the company.

MTN said it intends to use the proceeds of the asset sales to pay down US-dollar denominated debt, and "for general corporate purposes".

"We remain focused on continuing to execute on the important strategic priorities of reducing debt, simplifying the portfolio and reducing risk," the shareholder notice read.

MTN's share price, which opened at R82.21 on Thursday, hardly moved on the news. The share price closed 1.41% stronger at R83.56.

Earlier this week Fin24 reported that the group is facing a terrorism complaint, lodged in a US District Court.

The lawsuit was filed on behalf of 385 Americans, including families of US servicemen killed in Afghanistan.

The plaintiffs allege that MTN was among other Western businesses which made protection payments to the Taliban, and also deactivated its cell towers at night - on the Taliban's request.

MTN has said it is reviewing the details of the report and will consult its advisers.

The mobile operator said it remains of the view that it conducts its business in a "responsible and compliant manner" in all its territories and will defend its position where necessary. 

ZAR/USD
17.04
(-0.38)
ZAR/GBP
21.81
(-0.11)
ZAR/EUR
19.90
(-0.12)
ZAR/AUD
12.03
(-0.12)
ZAR/JPY
0.16
(-1.12)
Gold
1860.65
(+0.03)
Silver
22.87
(+0.11)
Platinum
844.51
(+0.50)
Brent Crude
42.23
(-0.12)
Palladium
2207.00
(+0.59)
All Share
53587.11
(-1.22)
Top 40
49547.74
(-1.16)
Financial 15
9401.28
(-1.95)
Industrial 25
72949.70
(-1.72)
Resource 10
53453.42
(-0.10)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1368 votes
It depends on how the funds are used.
73% - 8860 votes
No. We should have gotten the loan elsewhere.
16% - 1959 votes
Vote