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- Shares in Africa's largest mobile operator MTN leapt on Monday after it reported a rise in interim profit and a new investment from payments giant Mastercard.
- MTN says it now has almost 292 million subscribers, while both data and fintech revenue jumped more than a fifth in the six months to end-June.
- But while its new agreement with Mastercard should accelerate the growth of its fintech business, it's also in the midst of transforming its portfolio.
- For more financial news, go to the News24 Business front page.
Shares in Africa's largest mobile operator MTN jumped 10% on Monday morning, after it reported double-digit revenue growth for its half-year to end-June, and a new strategic investment from payments giant Mastercard that values its fintech business at R100 billion.
Group service revenue rose 16.5% to R107.7 billion to end-June, the company said, with after-tax profit rising 7.3% to about R11.2 billion.
The group now services almost 292 million cellphones across the continent, a 3.6% rise, while group data revenue rose 23.5% and fintech revenue just over 21%. Smartphone penetration rose almost four percentage points to 59%.
Shares in the group, which also announced that Mastercard agreed to take a minority stake in its financial-technology business, were up almost 9% to R141.07 in late morning trade, earlier reaching R142.57.
READ | Mastercard to buy stake in MTN’s R100 billion fintech business
MTN, which is in the midst of shaking up its portfolio, also gave an update on plans to reduce its stakes in some operations, particularly in west Africa, in order to advance its localisation initiatives.
MTN owns controlling stakes in operations in Nigeria, Ghana, Uganda and Cameroon, in which the sales will happen as market conditions allow.
The group has also received conditional approval from the regulators to proceed with the sale of its Afghanistan operation and anticipates the process to be completed during the second half of 2023. Discussions regarding the potential exit of west Africa operations in Guinea-Bissau, Guinea-Conakry and Liberia are continuing, said MTN.
MTN will offer shares for sale in an initial public offer at MTN Irancell, the largest operator in which it is a 49% partner, with the Iranian government holding the balance. The IPO is anticipated to be completed by the end of 2024.
With regards to continuing operations, MTN said it will invest R54.6 billion in its operations during the 2023 financial year. The bulk of this capital investment will be spent in SA and Nigeria.
IHS Towers battle
With regards to a dispute that the mobile phone operator called "governance matters" at IHS Towers, the Nigeria-based cellphone tower operator in which MTN owns a 26% stake, MTN said all its options remained on the table. MTN is the largest shareholder in infrastructure company and declared a dispute earlier this year in which it lamented "governance concerns".
The group has written to IHS demanding it call a special or extraordinary shareholders' meeting to trash the dispute. It is understood MTN, among others, is demanding the right to appoint some of the directors of the subsidiary and play a bigger role in the affairs of the company. MTN chief executive officer Ralph Mupita would not go into any details with regards to the dispute with IHS.
Enforcing its rights in the investee company would include taking legal action, but Mupita noted that one of IHS's largest shareholders have already taken legal action against the company. The board of IHS has not publicly responded to MTN's demands.
"IHS's refusal to bring proposals that were properly made under the Shareholders Agreement is not acceptable to MTN; this is not only a concern for MTN, but should be for all IHS shareholders," Mupita said in a media briefing on Monday morning.
"We also believe that IHS's current position of refusing to comply with its obligations and allow shareholders to vote on these proposals is having a significant negative effect on IHS's share price. We are disappointed at the slow pace of progress and are of the view that a resolution, which remains our priority, would be in the best interests of IHS and its shareholders.
"We firmly believe that there is a need for IHS to enhance and evolve its corporate governance and align it to the best practices prevalent among other publicly traded companies, enabling the voice of all shareholders to be heard."
Instead of responding directly to MTN's concerns, IHS appointed JPMorgan Chase & Co in June as an advisory consultant to deal with what the New York-listed feared could escalate to a hostile takeover attempt, Bloomberg has reported.
READ | IHS seeks JPMorgan's advice as management fears hostile takeover by MTN, Wendel - sources
MTN is not planning to sell its IHS stake in the medium term. Mupita said the group will update the shareholders on the matters as soon as there are any further developments.
