The mobile operator MTN has announced having released a loan of 231 million dollars in favor of mobile telephony IHS Holding Group. This should impact the annual profits of MTN for the current year.
228 million of expected losses
During the first quarter, the South African operator had returned to profit in the absence of special charges for the fine of $ 1.1 billion set by the Nigerian telecoms regulator. The management of MTN has however been less confident for the second half of the year by announcing that the sale of the loan to IHS should result in a loss of 228 million (2.8 billion rands) at the transfer the book value of the loan.
This should also result in an impact on the HEPS or earnings per share of the operator for 2017. This index represents the most important measure of profit in South Africa, which has the specificity to exclude exceptional items (such fine), but takes into account the earnings before interest, taxes, and amortization.
Joint venture to control the value chain to MTN Nigeria
According to MTN, the loan maturity is set for 2024-2025 should allow its Nigerian unit to continue its investments in its network and simplify the position of MTN in its joint venture with IHS. To recap, MTN formed in 2014 a joint venture with IHS, a company specialized in manufacture and array antenna installation. A reconciliation that seeks to control the entire telecom value chain for MTN Nigeria.
“The agreement will enable MTN and IHS mutually benefit from an investment and a continued commitment to the deployment of broadband services and data in Nigeria,” said management of MTN in a statement.
IHS is a service provider present in Nigeria, Cameroon, Ivory Coast, Rwanda and Zambia. In addition to MTN, the company collaborates with major operators in the hemisphere, including Orange, Airtel and Etisalat with a turnover of 976 million in 2016.