MTN’s beleaguered shareholders, who have been hit by crises ranging from allegations of corruption in Iran to the head of their Ugandan business being deported, were granted a reprieve on Thursday.
The mobile operator’s shares jumped the most since 2000 after it announced asset sales of at least R15bn over the next three years and said its performance would improve.
The stock, which had slumped in prior trading days partly on concerns that earnings were not recovering fast enough, more than made up for those losses as it jumped 18.1% to R89.80 on Thursday, the best close since November. The stock is still down by a third compared to its price of R135 a year ago.
The first of the planned sales, in line with CEO Rob Shuter's plan to simplify the business and concentrate in areas where it had the best potential would involve the sale of its 53% stake in Mascom Wireless Botswana to Econet for $300m (R4.3bn).
Finance chief Ralph Mupita said the “asset realisation” programme would probably also involve the sale of shares in MTN’s Nigerian, Zambian and Ugandan businesses to local investors, and the disposal of ecommerce and tower assets. The programme excluded what MTN might get from its R23bn investment in tower company IHS.
Mupita said MTN planned a so-called soft listing of its Nigerian business by July and shares would only be offered to the public at a later stage “when conditions are conducive”. MTN ultimately wanted local ownership to rise from 22% to at least 35% in that country, he said.
Analysts say that could temper regulatory risks in MTN’s biggest market, which also has been the source of most of its troubles.
In 2018, the operator’s shares crashed when Nigeria's central bank demanded that it return $8.1bn worth of dividends, while the country's attorney-general said it owed $2bn in back-taxes. A court hearing on the tax dispute is due later in March, while the tussle with the central bank has been resolved.
In Uganda, the group was looking to sell shares in its 96%-held business either privately or via a listing.
MTN said on Thursday its subscriber base grew by 7% in 2018 to 233-million customers, as headline earnings per share increased 85% to 337c.
“We really do believe that we’ve had very strong commercial momentum in the business,” Mupita said.
FNB Wealth & Investments's Wayne McCurrie said MTN was “doing well operationally”, although he remained cautious on the stock due to its lingering regulatory challenges. Regulatory and geopolitical risks, together with local-currency weakness in many markets, “continue to weigh on the investment case," Investec Asset Management analyst Jade Longano said.
Excelsia Capital analyst Mark Narramore said MTN’s stock offers value at current levels and with short positions closing, there's “probably limited downside as long as no random fines come along. I’m quite bullish on it.”
Thursday's rally came after the company said service-revenue growth accelerated to 10.7% in the year to end-December, prompting it to raise its medium-term guidance for service-revenue growth from high single digits to at least 10%.
The mobile operator said margins would also grow, and its return-on-equity ratio should lift to above 20%, from 11.5%. / With Bloomberg
Correction: March 7 2019
An earlier version of this article incorrectly stated that MTN's shares jumped the most in three years. It was the highest jump since the year 2000.
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