Following the recent announcement by the Macedonian government that it plans to float its 45% of its remaining 47% stake in MakTel, the company decided at its general meeting to use its cash to purchase 10% of its own shares from the government, to be turned into treasury shares.
The move is fully supported by Mtelekom, MakTel's majority owner (51%) as it efectively raises their stake in the company, without financing from them. MakTel will be financing the share purchase entirely from its own cashflows, which we believe is a more efficient use of cash.
Whilst we see the news as neutral in the near-term, we believe that longer-term, the impact on MTEL could be positive, especially as and when MakTel becomes a listed entity, given the potential increase in valuation. We reiterate our Buy recommendation on Mtelekeom.