DEBT WARNING
Moody’s warns MTN must control cash flow
The ratings agency says MTN risks a downgrade unless it gets its swelling debt under control
Ratings agency Moody’s expects MTN’s free cash flow to be negative in 2017 and warned that the group’s ratings hinged on its ability to manage its cash. MTN reported its first full-year loss on Thursday, largely because of the multibillion-rand fine from Nigeria and exchange rate losses. Its debt grew to R61bn from R38bn in 2015. The risk of a rating downgrade remained with MTN’s ability to manage its cash flows so that debt and leverage metrics did not increase, said Moody’s vice-president and senior analyst Dion Bate. He said the lack of dividend cash flows from Nigeria, weaker currencies in many African countries and high capital expenditure demands in SA had contributed to the higher debt levels and leverage. MTN’s capital expenditure in 2016 was R35.2bn, with the bulk of the money spent in SA and Nigeria. Bate said financial flexibility could be restored should MTN be able to start repatriating dividends from its Nigerian operations. However, there was uncertainty over timing.<...
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