MTN Group has reaffirmed its intention to reduce its presence in Nigeria, although the ongoing Covid-19 (coronavirus) outbreak may force it to sell off multiple smaller holdings in stages.
Speaking to Bloomberg, the operator’s CFO Ralph Mupita said that the South African group was cutting its majority holding in its Nigerian operation – MTN’s largest unit – due to its numerous high-profile clashes with the country’s government.
Over the past few years, MTN has been fined an initial sum of US$8.1 billion for the alleged illegal repatriation of revenue. The operator denied the charges and argued the fine down to a settlement of US$53 million, but was also facing a tax bill for US$2 billion.
While this demand was eventually withdrawn in January this year – with MTN shortly afterwards pledging to invest US$1.6 billion into Nigeria – the experience has evidently rattled the operator’s confidence in its largest market.
MTN owns 79% of its Nigerian unit, and had planned to sell a 15% stake of this to local investors. However, the ongoing pandemic crisis coupled with a crash in oil prices means that a phased sale is now more likely. MTN listed on the Nigerian stock exchange around a year ago, with the business valued at US$5 billion.
Mupita noted that MTN’s planned Nigerian sell-off forms part of a wider strategy to divest US$1.4 billion in assets across the next few years, but that this plan could be temporarily shelved given the current crisis. The impact of Covid-19 knocked MTN’s share prices to a 15-year low last week, but they have since recovered somewhat.
With an increasing number of countries implementing nationwide lockdown measures, Mupita noted that MTN was preparing its networks for a surge in data use, saying: “We want to make sure that our networks have resilience and capacity. We are looking at where we can drive broader coverage.”