News: MTN to divest its shares in Travelstart Africa’s leading Online agency
Mobile operator MTN told investors on Tuesday that it would raise R1.2 billion from selling its stake in Africa’s leading online travel booking website and its investment fund Amadeus as part of its R15bn disposal plan to reduce mounting debt.
The continent’s leading telecoms company said during a capital markets day presentation at its Johannesburg head office that it had agreed to sell all of its interests in investment fund Amadeus and its associated holding in Travelstart to HarbourVest, a global private equity firm, for net proceeds of approximately R1.2bn.
“The transaction is expected to close within the next three months, subject to customary closing conditions for a transaction of this nature,” MTN said. “MTN will maintain its commercial relationship with Travelstart going forward.”
MTN announced that it would embark on an asset realisation programme to raise R15bn over three years as net debt spiralled to R 63.5bn during the year to end March from R57bn in 2018.
The group said the programme entailed the sale of non-mobile assets, including investments in tower companies and e-commerce ventures following a review of the company’s portfolio.
MTN said at the time that its controlling stake in Mascom Wireless Botswana had been identified as a non-core asset and it later sold it to Johannesburg headquartered diversified telecoms group Econet Wireless for $300 million (R4.33bn).
Ofentse Dazela, a director for pricing research at Africa Analysis, said MTN teamed up with Travelstart about three years ago as part of a strategy to create new revenue streams and to take advantage of the new opportunities it believed existed in the e-commerce space at the time.
“Sharp declining voice revenue had galvanised MTN and other mobile network operators to explore other growth opportunities, while data was not generating as much revenue as is the case today,” Dazela said. “It made a lot of sense for the company to expand to adjacent markets, and it was keen on investing in technology companies in particular.”
Dazela said it was clear that MTN was returning to its core business to reduce risks by narrowing and simplifying its portfolio.
“To realise the R15bn worth of capital it requires in the next three years, it is likely to continue offloading none-core assets during the period,” said Dazela.
Travelstart was founded 1999 in Sweden and pioneered online travel in Scandinavia. In 2006, the company started in South Africa.
The Cape Town-based Travelstart said in a separate statement yesterday that HarbourVest would become a significant funding partner for the company.
Chief executive Stephan Ekbergh said HarbourVest would support Travelstart’s further expansion in geographies and growth in new verticals in the continents $194bn tourism and travel market.
“The partnership with HarbourVest is a confirmation of the future opportunity in online travel in this continent, our business and our team,” said Ekbergh.
MTN shares declined 2.51 percent on the JSE on Tuesday to close at R97.
BY DINEO FAKU