MTN of South Africa signalled a dramatic change in strategy, shifting from chasing marquee acquisitions to a concentration on investor payouts.
Phuthuma Nhleko, MTN’s CEO was speaking at the mobile phone operator’s AGM and said that after four failed…
MTN of South Africa signalled a dramatic change in strategy, shifting from chasing marquee acquisitions to a concentration on investor payouts.
Phuthuma Nhleko, MTN’s CEO was speaking at the mobile phone operator’s AGM and said that after four failed deals, the firm would look to concentrate upon maximising shareholder value. MTN’s share price soared on the news to R113.5, the highest price since 22 June, paring the YTD loss to 4.1%.
He said: “There are a limited number of value-accretive consolidation opportunities left within emerging market telecoms. We will position ourselves somewhat differently to how we have done over the past eight to ten years. One of the things we will do is to increase the dividend payout ratio.”
MTN has had a tough time seeking merger partners over the last two years. In June talks with Weather Investments collapsed over buying US$10bn of the Egyptian operator, Orascom. Negotiations with Bharti Airtel failed in 2009 – this was MTN’s second attempt to serenade the Indian telecom company. A year earlier, discussions with another Indian telecom, Mumbai-based Reliance Communications had also proved fruitless.
It was also announced that MTN would sell nearly 4% of its business to black investors under the South African black empowerment programme. A stake this size would be worth nearly US$1.1bn. The deal will cost MTN nearly US$301.4m, including US$129.96m in vendor financing and the cost US$20m to fund an employee share ownership programme.
