(Ecofin Agency) - South Africa's telecom operator, MTN Group, which also has the largest presence in Africa, collected R14 billion ($986 million) in 2019 with the sale of non-core assets.
“Realizing proceeds from simplifying the group remains a major strategic objective and we expect further progress in this program in 2020,” CEO Rob Shuter (pictured) said.
MTN plans to mobilize up to R15 billion over the three years of the program (2019 to 2021), but could quickly exceed this target. The group has reached an agreement to divest the telecom towers it operates in Ghana and Uganda to a subsidiary of the American Tower Company for $523 million (R7.3 billion). This transaction is expected to close in the first quarter of this year 2020. MTN also announced that it could sell half of its stake in Jumia, which was listed on the New York Stock Exchange in 2019. This interest represents an asset value of $655 million.
This strategy of the South African group aims to find resources to reduce its indebtedness, finance expansion in new markets and reduce the level of its operational risks. At the end of September 2019, MTN reported 243.6 million subscribers. Its debt at that time was over R90 billion; minus the cash holdings of the company, debt comes down to R70.8 billion. This is a level of debt lower than its equity (R84.9 billion).
However, more will be needed to maintain the current base of non-institutional investors in MTN's float on the Johannesburg Stock Exchange where the group is listed. Its share value was down 9% in the 12 months to January 10, 2020. Its net profit margin, calculated at the end of June 2019, was 6.9% compared to 18.4% for the telecommunications sector in emerging countries. MTN is overvalued on the stock market compared to companies in its sector.