MTN, Africa’s telecommunication giant is set to shut down operations in two African nations, Guinea-Bissau and Guinea-Conakry.
The development occurred after sealing a deal with Telecel, an Africa-focused telecommunications service provider, to acquire MTN’s equity stakes in these two African nations.
However, the value of the sale remains undisclosed, but MTN promises to share further updates regarding the transaction at the appropriate time.
This deal helps MTN’s “Ambition 2025” strategy, which is to exit smaller markets in the West and Central Africa (WECA) region and move its focus to larger markets in the continent.
The strategy comes due to issues highlighted by MTN CEO Ralph Mupita, which include inflation and currency devaluation.
Africa’s largest telecommunication network in Guinea Bissau and Guinea-Conakry has taken over thirty per cent (30%) of the market, but the reach has slowed down due to inflation and other financial struggles.
MTN Guinea-Bissau faced financial challenges due to a breach of loan covenant linked to negative EBITDA performance, leading to a reported loss of one million and sixty-nine billion Rands (R1.69 billion), equivalent to eighty-nine million, three hundred and ninety-two thousand, eight hundred and nine dollars ($89,392,809) in MTN’s annual financial report.
MTN praised the Africa-focus telecom service provider with a significant presence in the continent, Telecel is well-positioned to drive the required growth and further development of telecommunication operations and contribute to technological and economic progress in these region’s markets.
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What Does The Exit From The Two African Nations Mean To MTN Group?
The sale of MTN in Guinea Bissau and Guinea-Conakry will help the telecommunication giant drive its main focus and interests on stronger markets like Ghana, Cameroon, Nigeria, and Cote d’Ivoire.
These markets, which include several nations in the West and Central African regions, collectively contribute a substantial over eighteen per cent (18.6%) to the group’s overall revenue.
This significant contribution contrasts with the seven per cent (7.3%) revenue share contributed by Guinea Bissau, Guinea Conakry and some other West and Central African nations that are not mentioned.
This diversification across multiple markets underscores the group’s strategic approach to revenue generation and highlights the importance of these specific markets in its overall financial performance.
MTN Group is also looking to invest in expanding and modernizing its network infrastructure and rolling out new technologies like 5G in its stronger markets.
Expanding its strategic realignment beyond the African continent, the telecommunications giant recently finalized the divestment of its entire stake in MTN Afghanistan to Investcom AF.
This move signifies a significant shift in MTN’s global portfolio and strategic focus. The investment diversion process was structured with careful consideration, including the establishment of a six-month transitional services agreement.
This agreement underscores MTN’s commitment to facilitating a smooth and efficient transition period, ensuring continuity of services and operations during the handover process.
In the telecommunication company’s recently released audited financial results for the fiscal year ending on December 31, 2023, its performance reflected a tumultuous operating landscape in Nigeria.
This environment was marked by a confluence of challenges, including a notable uptick in inflation rates, ongoing currency devaluation, and persistent shortages in foreign exchange.
These factors combined to create complex and demanding economic challenges that impacted various aspects of the company’s operations, financial performance, and strategic decision-making processes.
In 2023, MTN revealed that it was considering an offer from Axian Telecom to acquire its operations in Guinea, Guinea-Bissau, and Liberia before Telecel came into the picture.
However, Telecel’s growth is expected to be boosted by this sale and solidify its position in the African telecommunication market.
The group, which operates in several African countries, including Ghana where it acquired a seventy per cent (70%) stake in Vodafone Ghana in 2023, stands to benefit from this transaction.
By February 2024, MTN had finalized the sale of its Afghan subsidiary to Investcom AF, thereby completing its withdrawal from the Middle East, Iran excluded.
