Why MTN Is Going Hands-off On Its Tower Businesses In Ghana And Uganda
MTN is easily the best-known telco in Africa, being one of the continent’s most expanded and valuable firms. The business’s activities so far have gone a long way to shape network services in the region.
Bringing the 5G demo, leading the mobile money 2.0 revolution and caught in a USSD charge dilemma between banks and subscribers pretty much formed the company’s 2019 story.
But things seems to be off to a rough start this year as MTN concludes an agreement to sell the 49 percent equity holding it has in the Ghana and Uganda Tower Company investments. It wants to dispose of the assets to an American Tower Company for USD 523 Mn, a transaction which is stipulated to be concluded this year.
One would think of downsizing or raising funds for other ventures could be the reason for the development. However, from the looks of things, MTN is trying to get the cash it needs to settle its debts.
The reduction of debt has always been on the priority list of the telco, so it is no wonder that it is going hands-off on some of its largest investments.
MTN has not exactly been best friends with Nigerian and Ugandan regulators. Due to a series of clashes between the company and the watchdogs – with billions on fines in-between – the South African company initiated a USD 1 Bn three-year asset-disposal plan at the beginning of 2020. The firm hopes to make at least USD 425.74 Mn from the sale, which is expected to close in Q1 2020.
It is also in the news that MTN has finalized the redemption of its Nigeria branch’s preference shares, reportedly raising USD 315 Mn. The company itself revealed that the money made from all the transactions – including the towers – will be used to pay down its USD-denominated debt and for general corporate purposes.
In a statement, the firm said: “We remain focused on continuing to execute on the important strategic priorities of reducing debt, simplifying the portfolio and reducing risk”.
The company also said it has plans to shed loss-making e-commerce assets and abandon countries where the conditions do not allow it to reach the top-two spots in market share.
MTN is currently in a USD 2 Bn tax dispute with the Nigerian government. Meanwhile, it seems to be at odds with the Independent Communications Authority of South Africa (ICASA).
For failing to provide a notice seven days before hiking monthly WhatsApp bundles, the regulator fined the mobile operator ZAR 5 Mn (some USD 349,759).
The sale also comes as American Tower continues to grow its presence in Africa, closing a previously announced deal to acquire Eaton Towers for USD 1.85 Bn. The company gained around 5,700 communication sites across five African markets through the transaction, expanding its global portfolio to around 177,000 sites.
Image Courtesy: The Guardian Nigeria
