MTN takes its asset rationalisation strategy further by selling stakes in TravelStart and Amadeus

South African telecoms giant MTN on Tuesday, May 28 announced that it would sell its stakes in Investment fund Amadeus and online travel booking website TravelStart to private equity firm HabourVest. This sale which cost R1.2 billion ($81,57 million) is part of its asset rationalisation strategy which the company intends to use to reduce its debt and enter into new markets.  It would be recalled that in 2016, Amadeus and MTN partnered to invest $40M in Travelstart.

MTN group plans to generate more than R15 billion ($1.01 billion)over the next three years through asset sales, as it moves forward with a strategy to “optimise the portfolio, reduce risk and improve returns.”

As part of this move, MTN sold its associate in Botswana, Mascom, for $300 million (R4.3 billion) to Zimbabwe’s Strive Masiyiwa. Earlier in the month, it was also announced that the company was looking to reduce its debt and enter into new markets by selling at least half of its stakes worth $655 million in Jumia Technologies AG.

Meanwhile, MTN Nigeria finally listed 20.4 billion shares on the Nigerian Stock Exchange (NSE) which was part of the requirement from the Nigerian government. It would be recalled that in 2016, MTN Nigeria settled with Nigerian Communications Commission (NCC) to reduce the fine of N1.04 trillion to N330 billion. The punitive fine was imposed because of the company’s failure to disconnect subscribers who were not adequately registered despite numerous warnings by the regulatory body urging its compliance.

After much deliberation, the fine was significantly reduced with terms mandating the company to list its shares on the Nigerian Stock Exchange (NSE) and offer a formal apology to the government and the citizens within a month of executing the agreement. When the agreement was reached, the Minister of Communications, Adebayo Shittu, remarked that the settlement was in order to encourage investment in the country.

As a result of this fine by Nigeria, MTN’s biggest market, it recorded a loss of 445 cents per share in 2016, but in 2017 it recorded an increase in its profit.

Although MTN has listed on NSE there have been a lot of negative reactions with regards to why it decided to list by introduction rather than doing an initial public offer just like it did in Ghana last year. The company have decided to enrich a selected few which could also include its investors rather than the general public.

In the early hours of today, MTN’s shares were 0.2 percent down at R99.32 after falling 0.8 percent on Monday following an announcement that Nigerian authorities were investigating its listing in that market.