MTN’s latest financial results show that Afrihost is buying back its shares for much less than what MTN paid two years ago.
MTN has released its group interim financial results for the six months ended 30 June 2016, which show it is selling its 50.02% stake in Afrihost for R325 million.
MTN said in its financial results it had concluded an agreement to sell its investment in Afrihost for R325 million, but also reported the figure as R320 million.
A source has confirmed the amount is R325 million.
MTN bought its controlling stake in Afrihost in 2014 for R408 million, which means MTN has made a loss on the transaction.
“Based on an agreement concluded by the Group to sell its 50.02% investment in Afrihost for [R325] million, a goodwill impairment loss of R202 million was recognised at 30 June 2016,” said MTN.
MTN said this goodwill impairment loss was “recognised on the remeasurement of the assets to fair value less cost to sell in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations”.
MTN said in June that “evolving market circumstances have resulted in MTN reviewing its ownership in Afrihost”.
“As a result, MTN has agreed to dispose of its shareholding to the executive management of Afrihost.”
The transaction is subject to the fulfillment of applicable conditions relevant to the transaction.
Original Article: http://mybroadband.co.za