JOHANNESBURG - Mobile operator MTN said yesterday that it aimed to raise a further R25billion through the sale of non-core assets over the next three to five years in an effort to simplify its portfolio and improve return on equity to about 20percent from 13percent in 2019.
Chief executive Rob Shuter said the group had identified R45bn in non-core assets, and was targeting sales in the medium term, which would contribute to reducing the holding company’s leverage target ratio to below 2 times from the previous guidance of between 2 and 2.5 times.
“So why are we doing this? We want to simplify the portfolio, reduce risk, improve returns and, of course, it will be very valuable to bring down our leverage ratios for the future,” said Shuter.
Shuter told the group’s annual results presentation in Johannesburg yesterday that the R25bn asset realisation programme was on the back of MTN delivering R14bn realisations within the first year of its three-year R15bn target announced last year.
MTN sold its 49percent stake in Ghana and Uganda Tower Company for R14bn. It also disposed of its stakes in Amadeus and Travelstart.
Shuter said the highlights of 2019 included service revenue rising 9.8percent in constant-currency terms and the group adding 18.2million new subscribers to 251million despite macroeconomic headwinds in its biggest markets of South Africa and Nigeria.
MTN said it recorded 95million active data users and 35million active MoMo users in 2019.
The group declared a final dividend of 355cents per share, bringing the total dividend for the year to 550c per share, up 10percent from the prior year.
“In 2019, the 25th anniversary of MTN Group, we delivered commercial momentum across our operations, as well as great progress in our strategy and strong financial results, despite challenging trading conditions,” Shuter said.
MTN’s South African performance was, however, underwhelming during the period as service revenue grew only 0.4percent, below the company’s guidance of mid-single digits as the economy weighed heavily on consumers’ pockets.
Local operations were hurt by the Independent Communications Authority of South Africa’s new data usage rules, which impacted the out-of-bundle data revenue.
The group said it did not recognise R283m of Cell C revenue, given the liquidity challenges that the business faced in 2019.
In Nigeria, revenue grew a robust 12.6percent.
MTN Nigeria listed on the Nigeria Stock Exchange, and the company received its super-agent licence, and by December 2019 had 108000 registered agents.
Regarding the coronavirus, Shuter said MTN was concerned for the short term.
“It will have a short-term commercial impact simply because people will travel less and it will impact things like roaming revenues,” he said.
“In general, we would say it will have a moderate impact in the shorter term. The more significant impact is how it will impact on reliance on imported equipment, including SIM cards and handsets. We are putting a lot of plans together to mitigate that. In general, I think we are in good shape to weather the process.”