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20 Jun 2013 16:37
MTN will be exposed to less strict corporate governance and more unpredictable regulations (Reuters)
MTN Group, Africa’s largest wireless provider, is exposing itself to a greater level of risk as it increases investment throughout the continent, according to Fitch Ratings.
“MTN’s operating model has changed from a pure-play South African company to now a company that’s spread all across Africa,” Fitch analyst Darshak Juta said. “If you look at ratings on African countries, most of them are sub-investment grade.”
The possibility of default, less strict corporate governance and unpredictable regulatory authorities were all concerns, he said.
MTN expects to have more than 200 million subscribers by the second half of this year and is seeking acquisition targets in Africa, Southeast Asia, India and the Middle East.
The company’s capital spending rose 70% to R30.1-billion as it upgraded networks to handle more data traffic as consumers access the Internet from mobile devices.
The ratings company assigned MTN a long-term foreign currency issuer default rating of ‘BBB’ with a stable outlook, it said in a research note yesterday.
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