MTN sells Botswana stake for $300m as drive to raise $1.1bn kicks off

By Loni Prinsloo

(Bloomberg) – MTN Group Ltd. announced the disposal of its share in a Botswana joint venture as Africa’s biggest wireless carrier by revenue kicks off a drive to raise at least R15bn ($1.1bn) from asset sales and strengthen the balance sheet.

The company agreed to sell its 53% stake in Botswana’s Mascom to Econet Wireless Zimbabwe Ltd. for $300m, the Johannesburg-based company said in a statement on Thursday. 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., the company said.

The news comes a year after Chief Executive Officer Rob Shuter announced a review of MTN’s then-22 markets across the Middle East and Africa to evaluate ways of simplifying the business. The sale of MTN’s Botswana interest follows a disposal of its Cyprus unit for €260m ($294m).

“We are simplifying the group, we are reducing risk, and improving returns,” Shuter said in a phone interview. “That will generate some returns that will be helpful for our gearing and other priorities.”

The shares gained as much as 7.5%, the most since Dec. 27, and traded 7% higher at R81.41 as of 9:21am in Johannesburg. The stock has slumped by a third in the last 12 months, valuing the carrier at R153bn.

MTN reported the strategy alongside 2018 adjusted earnings per share, excluding some items, of R3.37. That compared with a company guidance of R3.28 to R3.46. The firm also raised its medium-term service-revenue guidance to double-digit percentage figures from upper-single-digits. Dividend growth will be in the 10-20% range, though for 2019 the payout will probably be at the lower end.

The mobile-phone company is still facing a number of challenges across its territories, with a Nigeria court hearing into an alleged unpaid tax bill of about $2bn due later this month. That’s just the latest in a series of controversies in MTN’s biggest market. Late last year, the carrier agreed to pay $53m to settle a separate allegation about the illegal repatriation of funds, while a $1bn fine in 2016 led to a full-year loss. MTN still plans to list its Nigeria unit in Lagos over the first half of the year.

The $53m outlay was among one-time costs outlined by MTN in a recent trading statement as hurting 2018 earnings. Those also include the effect of a stronger rand when compared to the various other currencies it uses in different markets.

The carrier said little about recent challenges in Uganda, where its local CEO was deported last month. MTN has been granted an extension of its operating licence to allow for negotiations about a renewal, the company said. Net debt rose to R63.5bn from R57bn, and proceeds from the asset sales will be used to pay that down.

MTN also reiterated that it sees “no legal merit” in a long-running $4.2bn lawsuit by Turkcell Iletisim Hizmetleri AS over the award of its Iran license. The case returned to the spotlight in February after South Africa’s former ambassador to Iran was arrested on corruption charges.

The full-year year dividend was R5 a share, while subscriber numbers increased to 233m across 21 countries.