MTN continues its spin-off of non-core assets
JOHANNESBURG - AFRICA’S biggest mobile operator MTN yesterday announced that it had sold its 20 percent stake in Belgacom International Carrier Services (Bics) for R1.8 billion to Belgian digital services provider Proximus as part of a process to dispose of non-core.
MTN, whose net debt stood at R70.9bn at the end of June last year, said that the proceeds of the transaction would go towards paying down US dollar debt and for general corporate purposes.
“The sale represents further progress in MTN’s stated asset realisation programme, which aims to reduce debt and risk and unlock value,” MTN said.
Bics is one of the world’s biggest providers of roaming services and has been MTN’s preferred provider for international voice and messaging services to and from the rest of the world for years.
MTN said the closing of the transaction was dependent on customary regulatory approvals.
“Bics was classified as a non-current asset held for sale and this transaction has resulted in a remeasurement of its carrying value, resulting in a reduction of R397 million for the year ended December 31, 2020,” said MTN.
“Once all the conditions precedent have been fulfilled, MTN will receive proceeds of approximately €100 million (R1.8 billion) in cash, which the group intends to use to pay down US dollar debt and for general corporate purpose.” The group said it would record a profit on disposal amounting to approximately R1.2bn during the first half of 2021, mainly due to the release of the foreign currency translation reserve.
“This results in a net impact of R812 million over the two periods,” said MTN.
Former chief executive Rob Shuter unveiled MTN’s asset realisation programme in March 2019 in which assets that were not long-term strategic would be sold when market conditions were conducive.
The group initially set a target of raising R15bn, which was achieved within 12 months.
In March last year the group announced a further R25bn target in asset sales over the medium term.
In March, MTN sold its 49 percent stake in ATC Uganda and ATC Ghana for R8.9bn. In November, the group offloaded its 18.9 percent stake in African online retailer Jumia, making R2.3bn in net proceeds.
Shuter said the company would focus on a pan-African strategy and make an orderly exit of Middle Eastern assets over the medium term.
As a first step, MTN entered into advanced discussions to sell its 75 percent stake in MTN Syria.
Last week, MTN announced earnings per share would be between 75 percent and 95 percent higher for the year ended December 31, 2020 to between 886 cents to 987 cents compared with 506 cents for 2019.
The group said earnings per share included impairment losses totalling about 155 cents that relate mainly to MTN Syria, MTN Yemen, MTN Guinea Bissau, MTN Liberia and Bics.
Earnings per share also included the benefit from gains amounting to approximately 341c on the disposal of the ATC Uganda and ATC Ghana tower joint ventures.