African telecom giant, MTN Group has announced that it is selling off its stake in Ghana Tower Interco B.V and Uganda Tower Interco B.V.
The telco which holds 49% equity of the Ghanaian and Ugandan tower company will be selling off all of its stake to AT Sher Netherlands Coöperatief U.A, a subsidiary of American Tower Company. MTN will get for $523 million for the deal.
According to a statement released by the telco, the agreement has been concluded and the transaction is expected to be closed in the first quarter of 2020.
“Firstly, MTN has concluded an agreement to dispose of its 49% equity holdings in the Ghana and Uganda Tower Company investments to a subsidiary of American Tower Company for $523 million, approximately R7.3 billion. This transaction is expected to close in Q1 2020.”Extract Statment signed by MTN CEO, Rob Shuter
MTN is expected to rake in $523 million for the deal, leaving it with a profit of $425.74 million. Sounds like good business.
Over the past year, MTN has faced off with regulatory bodies across Africa, especially Nigeria, and have had to part away with more than $5.2 billion in fines.
The loss from these clashes greatly affected MTNs growth and returns, prompting CEO, Rob Shuter to initiate a recovery plan. This includes eliminating loss-making assets and exiting countries where MTN has no prospect of having one of the highest market shares.
MTN explained that the shedding is part of their 1 billion three-year asset-disposal plan and strategic repositioning to refocus on the high-growth markets of the continent and the Middle East.
The proceeds from the sale will be used to offset its U.S. dollar-denominated debt. It is also expected to help the company simplify its portfolio as well as improve returns.
“We remain focused on continuing to execute on the important strategic priorities of reducing debt, simplifying the portfolio and reducing risk,”Extract Statment signed by MTN CEO, Rob Shuter
MTN is looking to shed low-profit assets and refocus investments into high growth markets on the continent. It also plans to exit markets where the possibility of being among the top two market holders is low.
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