NIGERIA – MTN Group Limited, a telecommunication company, has resolved to go ahead with plans to reduce its stake in its Nigerian subsidiary. It plans to sell part of its 79% stake to local investors.
The South African based firm, whose Nigerian business unit is the largest telecommunication firm in Nigeria, will have to sell off those shares in smaller units than earlier anticipated due to the effect of the coronavirus pandemic on the global economy and the capital market.
Nigeria, accounted for a third of overall 2019 revenue and almost 40% of earnings before interest, taxes, depreciation and amortization, is also the biggest provider of telecommunication services in the country, with about 69 million customers, according to the Nigerian Communications Commission (NCC).
In a monitored report, the Chief Financial Officer of the firm, Ralph Mupita, in an interview, said, “However, the rest of a three-to-five-year plan to dispose of 25 billion rands ($1.4 billion) of assets will probably take a back seat for nor.”
Mupita said that the rest of a three-to-five-year plan to dispose of 25-billion rand (US$1.4 billion) of assets will probably take a back seat for now.
This started when in 2015, Nigeria slammed the teleco firm with a heavy fine of US$5.2 billion after it was accused of a security breach and not disconnecting users with improper records.
However, this fine was reduced to US$3.9 billion after diplomatic negotiations between the South African Government and then MTN itself.
The company also recently had a legal disagreement with the government over tax payments and irregular capital importation certificate.
MTN plans to dispose of its 15% stake to indigenous investors, thereby reducing its shareholding to about 64%.
The CFO said, “We, of course, have no visibility on how all of this could play out, but the business currently has a resilient balance sheet and is highly cash generative, with most of our business coming from pre-paid contracts,”
The telecoms firm expects an increase in data usage as its customers go into lockdown and restrictions due to the outbreak of the coronavirus.