Photo by: Bloomberg
As telecommunications group MTN wraps up the first year of a three-year, R15-billion asset realisation programme (ARP), the medium-term targets have now been increased to release at least a further R25-billion.
MTN realised about R14-billion in 2019 under the portfolio optimisation, which was launched in March 2019 to reduce debt, simplify the group’s portfolio, reduce risk, improve returns and realise capital of at least R15-billion over three years.
“In the first half of 2019, we realised R2.1-billion through the sale of our shareholder loan in ATC Ghana and the sale of our interests in investment fund Amadeus and its associated holding in Travelstart for net proceeds of R1.2-billion,” explains MTN group CEO and president Rob Shuter.
Jumia Technologies successfully raised capital and listed on the New York Stock Exchange, resulting in the dilution of MTN’s shareholding from 29.7% to 18.9%.
During the year under review, MTN Nigeria redeemed its preference shares as part of a process to simplify its capital structure, which resulted in proceeds of $314-million.
In January, MTN agreed to sell its 49% equity holdings in Ghana Tower Interco and Uganda Tower Interco to AT Sher Netherlands Cooperatief for $523-million in cash.
“Following the completion of these transactions, we will have realised about R14-billion within the first 12 months of the three-year programme,” says Shuter.
MTN will use the proceeds to pay down US dollar debt and for general corporate purposes.
“Our ARP has performed better than anticipated,” he continues.
MTN group CFO Ralph Mupita adds: “The balance sheet is gaining more strength and more flexibility, but we are not yet satisfied it is where it needs to be, so we are pushing ahead with further asset realisation of an additional R25-billion over the medium term.”
In line with this, MTN fair-valued its ecommerce, the tower portfolios and markets for further localisation, which added to a fair value of R45-billion, excluding the R14-billion already achieved.
Of the value determined, MTN expects to reasonably realise proceeds of R25-billion in three to five years.