MTN shares rocket higher on asset disposal plan

MTN Group shares jumped the most in almost three years after Africa’s biggest wireless carrier started a R15-billion disposal plan to shore up the balance sheet.

The company agreed to sell its 53% stake in Botswana’s Mascom to Econet Wireless Zimbabwe for US$300-million (about R4.3-billion), the Johannesburg-based company said in a statement on Thursday.

Other businesses now on the market include e-commerce services, which include Nigerian online retailer Jumia Technologies and Travelstart.co.za. MTN is also looking to sell its interest in IHS Towers, the company said.

The news comes a year after CEO Rob Shuter announced a review of MTN’s then-22 markets across the Middle East and Africa to evaluate ways of simplifying the business and focus on the highest-earning countries.

South Africa, Nigeria, Iran, Ghana and Uganda account for more than 84% of earnings, while some of the others, such as South Sudan and Syria, have been ravaged by conflict. MTN sold its Cyprus unit for €260-million last year.

“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.”

Earnings

The shares gained 15%, the most since June 2016, to R87.83 as of 12.34pm in Johannesburg. The stock is still down by 28% in the last 12 months, valuing the carrier at R166-billion.

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 full-year year dividend was R5/share, while subscriber numbers increased to 233 million across 21 countries.  — (c) 2019 Bloomberg LP