S.Africa’s MTN to spin out fibre, fintech businesses to unlock value

South African mobile operator MTN Group is considering spinning out its fibre and financial services units and potentially list one of them to unlock value trapped in its core business, the company said on Wednesday.

MTN, with 280 million subscribers across 21 countries in Africa and the Middle East, has been diversifying from its core business of connectivity to financial services and digital offerings such as instant messaging in search of higher returns.

But it believes some of those businesses can thrive and be valued better if they are spun out from the core business, such as its fintech, fibre and data centre assets, Group Chief Executive Officer Ralph Mupita said.

“MTN Group has enormous value that is not currently reflected in the share price,” Mupita told Reuters in an interview after the group reported a surge in 2020 earnings.

“Within the core (connectivity business) there are some infrastructure assets and platforms that we believe the market is putting little to no value on,” he said, adding that those assets are valued at low EBITDA (earnings before interest, tax, depreciation and amortisation) multiples.

The company also suspended its dividend for the year despite the rise in 2020 earnings to focus on faster debt reduction at its holding company and due to uncertainties around repatriating funds from Nigeria, the timing of proceeds from its asset sale programme and the impact of COVID-19. – reuters.com