JOHANNESBURG (Reuters) – MTN Group introduced on Thursday a $1 billion divestment program over the subsequent three years that can slim down Africa’s greatest cell phone operator and refocus it on high-growth markets on the continent and within the Center East.
Based with Pretoria’s assist after the top of white minority rule in 1994, MTN has been considered one of South Africa’s greatest company success tales, however clashes with regulators in Nigeria, Uganda and elsewhere have crimped progress.
Chief Govt Rob Shuter, employed from Vodafone in 2017, has drawn up a turnaround plan that features shedding loss-making e-commerce belongings and exiting international locations the place MTN has no prospect of reaching second place by market share.
On the similar time, Shuter is pushing the corporate into cell monetary providers, music streaming and cell gaming, betting on a burgeoning younger tech-savvy inhabitants to offset falling costs for fundamental telecoms providers.
“What we actually wish to say to the funding group is that we’ve bought an organization with excellent progress prospects and a really particular plan to simplify and modernize the group,” Shuter instructed Reuters.
As a part of the evaluate, the South African firm has agreed to promote its minority stake in Botswana’s Mascom for $300 million. It offered its sole European unit in Cyprus final 12 months.
Shuter has not named the international locations that MTN was getting ready to exit, however his suggestion that it will deal with high-growth, secure geographies counsel smaller companies in Liberia, Guinea, Guinea-Bissau, and worn-torn Syria, South Sudan and Yemen is likely to be lower, analysts stated.
MTN stated its investments in tower corporations and e-commerce platforms like African on-line retailer Jumia have been valued at 40 billion rand and can be offered over time as they weren’t long-term strategic belongings.
Shares within the firm surged 15 % to 87.39 rand, heading in the right direction for his or her greatest one-day rise in since 2008.
“They’re focusing extra on telecoms, which is the enterprise that they do, and they’re making an attempt to keep away from all the pieces that distracts them. I don’t suppose that’s a foul factor,” stated Shiny Khumalo, an analyst at Vestact in Johannesburg.
Within the final monetary 12 months MTN reported an 85 % surge in headline EPS, the primary revenue measure in South Africa, to 337 cents.
Nonetheless, the underside line remains to be not at even half the extent MTN reported in 2015, the 12 months earlier than it agreed to pay a $1.7 billion positive in Nigeria for lacking a deadline to chop off unregistered SIM card customers.
The positive was diminished from $5.2 billion after MTN made concessions, together with a promise to checklist its Nigeria unit.
The flotation of MTN Nigeria, which accounts for a 3rd of MTN’s core revenue or EBITDA, is prone to happen by the top of June, the corporate stated.
The unit has additionally been embroiled in different rows with the Nigerian authorities. It agreed to pay $53 million in December to resolve a dispute with the Central Financial institution of Nigeria and is concerned in a court docket battle with the Nigerian lawyer basic over $2 billion in again taxes.
MTN has additionally confronted run-ins with authorities in different international locations, together with Uganda, the place 4 senior executives have been deported in current weeks on accusations of compromising nationwide safety.
Extra reporting by Chijioke Ohuocha in LAGOS; Modifying by Edmund Blair, Alexandra Zavis and Jan Harvey
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