Ghost Bites (MTN | Murray & Roberts)

Another African nightmare for MTN?

There’s never a dull moment when doing business in Africa

There are three certainties in life: death, taxes and African governments trying to fleece multinational organisations for money. We are used to this in Nigeria, a country in which MTN has a long and often painful history. Just when we thought the troubles were behind MTN, the FOMO has become too much for Ghana and that government has decided to have a go.

This isn’t a small issue, either. MTN’s subsidiary in Ghana has been issued with a tax assessment which infers that MTN under declared revenue by around 30% over the period of 2014 to 2018. It seems outrageous that this could be true. Unsurprisingly, MTN Ghana “strongly disputes” the assessment, which was based on methodologies like call data records, recharges and other data.

How much are we looking at here? Well, the Ghanaian government has issued an assessment for $773 million. That’s a lot of money.

The announcement came out after the market closed on Friday, so I’m expecting some pain in the share price when it opens on Monday. I still believe in what MTN is doing in Africa and I’m a shareholder. Sadly, these sorts of issues are a reality when operating in high growth, risky markets.

Before you are tempted to suggest that MTN should pack it in and focus on South Africa, I would remind you that our cellphone towers currently stop working after about 2.5 hours of load shedding and our economy’s growth rate is slower than the annual egg-and-spoon race at your local frail care centre.

This isn’t an easy industry.

Murray & Roberts releases the Bombela circular

The embattled construction company is selling the Bombela Concession stake to Intertoll International

At the beginning of December, Murray & Roberts gave the market a glimmer of hope by announcing the sale of the stake in Bombela Concession Company for up to R1.386 billion. The purchaser is Intertoll International, a leading European investor in motorway concessions and related operations.

Nevermind a toll on the roads or railways – the economy has taken its toll on Murray & Roberts, with the company facing a liquidity crunch that needs to be dealt with urgently. The proceeds from this deal (assuming shareholders approve it) will be used to reduce debt and improve the state of the balance sheet in general.

Going forward and with Clough in Australia now placed into voluntary administration after a deal to try and sell that company fell through, Murray & Roberts will have two business platforms: Mining (a global business) and Power, Industrial & Water (focused on sub-Saharan Africa).

Murray & Roberts hopes to be able to deliver earnings growth from FY24 onwards, with the company acknowledging that this would be off a low base.

Here’s an ugly share price chart to make you feel better about your bad choices in tech stocks:

Little Bites:

• Director dealings:
  • The CEO of Stor-Age has sold shares worth over R2.75 million, with the proceeds used to settle loan obligations to Stor-Age in terms of the old share purchase and option scheme for executives of the company
  • The financial director of Zeda (the mobility group unbundled by Barloworld) has acquired shares in Zeda worth over R150k
  • An associate of a director of Huge Group has acquired shares worth just over R20k

• Premier Fishing and Brands’ circular related to the African Equity Empowerments Investments (AEEI) offer hasn’t been released yet. This is because the company is engaging with the JSE over whether or not this is a related party transaction for AEEI. The company hasn’t given a revised date for the issuance of the circular.

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