Wednesday, 05 May 2021

'Strategic repositioning’: MTN prepares unit spin offs

by Harry Baldock, Total Telecom
Monday 15 March 21

The African operator said that separating its fibre and fintech units will help to raise funds for expansion

MTN is looking to maximise the value of its existing infrastructure and platforms, like fintech, by spinning off these assets, said the African operator last week. During the release of MTN’s Q4 202 results, the operator revealed details for its overarching strategy for the next four years, which it calls the Ambition 2025 project. The strategic plan will see the company continue to sell its assets and pay down debt…

MTN is looking to maximise the value of its existing infrastructure and platforms, like fintech, by spinning off these assets, said the African operator last week.

During the release of MTN’s Q4 202 results, the operator revealed details for its overarching strategy for the next four years, which it calls the Ambition 2025 project. The strategic plan will see the company continue to sell its assets and pay down debt, freeing up capital for further expansion. In total, the group aims to raise around $1.68 billion.

“As part of this strategic repositioning, we are looking to structurally separate our infrastructure assets and platforms, such as fintech, to reveal value and attract third-party capital and partnerships into these businesses, over the medium-term,” said MTN Group CEO Ralph Mupita.

The company’s fibre network spans 85,000 km throughout the African continent. With data demands steadily increasing around the world, further expansion will soon be a necessity.

“We recognize that there is a significant data demand in Africa that is not going to stop,” said Mupita. “Nothing is stopping us bringing other parties to help us fund the infrastructure we need. That work is already underway.”

Beyond fibre, Mupita also said that he expected the fintech business to rapidly increase in value over the coming years, as smartphone penetration increases throughout Africa. Currently, MTN’s fintech business contributes just 8% of the Group’s revenue, with Mupita suggesting this could rise to 20% over the next three to four years.

This strategy of monetising assets had already somewhat started last year, with American Tower buying up MTN’s minority stakes in their Ghanaian and Ugandan infrastructure joint ventures at the start of 2020. The sale raised generated around $523 million for MTN. The company also divested of its stake in e-commerce group Jumia Technologies towards the end of the year.

A possible next step for MTN will be the sale and leaseback of its South African mobile towers, which it has been considering since at least December last year. The company owns around 13,000 towers, around half of which were considered ‘feasible for sale’. If MTN does follow through with this plan, it would become the latest in a long string of operators to be selling their mobile towers over the last year, with the likes of Cellnex and the aforementioned American Towers being the major beneficiaries. 

 

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