Shares of African telecoms giant, MTN Group, gained the most since 2016 at the start of its plans to raise $1.1 billion from asset sales to prop up balance sheet coupled with declared dividend.
The South Africa-based wireless carrier said in its 2018 financial statement on Thursday, that its board has declared a gross final dividend of 325 cents per share, bringing the total dividend for the year to 500 cents per share.
The telecom company also revealed that it agreed to sell its 53 percent stake in Botswana’s Mascom to Econet Wireless Zimbabwe Ltd. for $300 million.
The market cheered both announcements as the company’s share price went up by 18 percent on the Johannesburg Stock Exchange from ZAR7,606 it traded at the opening of trading on Thursday, 07 March 2019 to ZAR 8,980 at the close of the market.
The trade represents the most daily MTN has reported since June 2016, although the stock is still down by 28 percent in the last 12 months, valuing the carrier at 166 billion rand.
The sale of its Mascom’s stake follows a disposal of its Cyprus unit for $294 million last year. This now leaves the telcom company with 21 markets across the Middle East and Africa.
Other businesses now on the market include e-commerce services, which includes Nigerian online retailer Jumia Technologies AG and Travelstart.co.za. MTN is also looking to sell its interest in IHS Towers Ltd., according to the the statement by the telecom.
“We are simplifying the group; we are reducing risk, and improving returns,” Group president and CEO, Rob Shuter, said. “That will generate some returns that will be helpful for our gearing and other priorities.”
According to the company’s financials for the year ended 31st December 2018, the group revenue increased by 10.2 percent and service revenue increased by 10.7 percent, supported by growth in MTN Nigeria (up 17.2%), MTN Ghana (up 23.0%), MTN South Africa (up 4.2%) and MTN Uganda (up 8.9%).
“MTN Nigeria extended the strong performance evidenced at the interim period and reported full-year results ahead of expectations, with double-digit growth in voice revenue (+18,7%*) driving strong service revenue growth and the further widening of the EBITDA margin,” the report read.
MTN Nigeria recorded N453.1 billion Earnings Before Interest, Taxes, Depreciation and Amortization, EBITDA, in 2018. Figures from MTN Group’s 2018 full year investor presentation showed that the Nigeria subsidiary of the group company have joined the ranks of firms with over N1 trillion in revenue in the country.
Revenue in Nigeria rose from N887 billion in 2017 to N1.03 trillion in 2018 an increase of 17.1 percent year on year.
The communications company also attracted additional six million subscribers to its network in the year. This was despite the margin being negatively impacted by one-off legal costs related to the resolution with the Central Bank of Nigeria as well as the planned listing costs. These costs totalled R194 million.
“MTN Nigeria is clearly benefiting from deliberate investments in our network, cost optimisation initiatives and human capital,” the company said.
Meanwhile, on 24 December 2018, MTN South Africa announced that MTN Nigeria had successfully resolved the matter with the CBN related to the notional reversal of a 2008 private placement transaction.
Although the tax dispute between MTN Nigeria and the Attorney General is yet to be resolved and will come before the Nigerian courts on 26 March 2019, the audit committees of both MTN Nigeria and MTN Group have assessed the Attorney General claims and remain of the view that all taxes due have been paid, and as such no provision or contingent liabilities need to be raised. “We will vigorously defend our position on this matter,” the company said in the report.
MTN Nigeria expects to list its shares on the Nigerian Stock Exchange in the first half of 2019, “subject to regulatory approvals.” According to the company the listing will be achieved “via a listing by introduction and will be followed by a public offer once market conditions are conducive,” MTN said.
Endurance Okafor
