MTN to exit Middle East markets, focus on Africa

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Telecommunications giant MTN is planning to exit its Middle East markets over the medium term as it turns its focus solely to its African markets.

The group’s renewed focus on the future of its pan-African strategy forms part of its ongoing portfolio review programme.


MTN has resolved to simplify its portfolio, amid an increasingly complex environment in the Middle East.

“We will be exiting the Middle East [markets] in an orderly manner over the medium term. As a first step we are in advanced discussions to sell our 75% stake in MTN Syria,” said MTN Group president and CEO Rob Shuter.


TeleInvest, which is the minority shareholder in MTN Syria with a 25% holding, will acquire MTN Group’s interest in MTN Syria for a net selling price of about $65-million, with expectations that the deal will conclude within the next six months.

MTN Syria forms part of MTN’s MENA cluster, which also comprises consolidated subsidiaries in Sudan, Yemen and Afghanistan, and a 49% joint venture in IranCell.

The phase one exit will include Sudan, Yemen and Afghanistan.

“In time we will see a full exit,” he said of plans to potentially divest in IranCell in a much longer term.

The Middle East assets contributed less than 4% to group earnings before interest, taxes, depreciation and amortisation (Ebitda) during the first half of 2020.

Meanwhile, MTN continues to progress its R25-billion asset realisation programme (ARP), launched in March 2019 to reduce debt, simplify the portfolio, reduce risk, improve returns and realise capital over three to five years.

During the first half of the year, MTN concluded the disposal of its 49% equity tower holdings in Ghana and Uganda to AT Sher Netherlands, with cash proceeds of $524-million received.

“This completed the first phase of our ARP, with the full R15-billion of the initial three-year plan realised within the first 12 months,” Shuter said.

However, the Covid-19 pandemic and flux in global oil prices has brought about extraordinary macroeconomic uncertainty and major volatility in financial markets that has impacted MTN’s ability to continue with further realisations in the short term.

“We remain committed to execute on the ARP over the medium term and have made significant progress in laying the groundwork for when conditions become more conducive.”

Meanwhile, MTN and its co-shareholders in carrier business Belgacom International Carrier Services (BICS) are also in discussions regarding a potential sale of a controlling stake in BICS.

The group holds a 20% investment in BICS and the investment in the associate is not considered a strategic investment.

BICS was accordingly classified as a noncurrent asset held for sale on August 5.


MTN posted growth in earnings during the six months ended June 30.

Service revenue expanded 9.4% to R80-billion and Ebitda increased 10.9% to R42-billion as efficiency initiatives saw its profit margins continue to improve during the first half of the year.

MTN’s Ebitda margin improved by 1.2 percentage points to 43.1%.

Basic earnings a share, which include the gain on disposal of the tower associates, increased by 165.4% to 674c, supported by the weaker rand and an overall healthier operational performance, as well as an improved contribution of share of profits from joint ventures and associates.

Reported headline earnings a share increased by 120.5% to 430c, as nonoperational impacts increased the earnings by 46c.

“MTN delivered strong results for the period against the backdrop of difficult trading conditions, exacerbated by the unprecedented socio- and macroeconomic challenges caused by the Covid-19 pandemic,” Shuter commented.

MTN Ghana delivered another strong performance in the first half under review, while MTN Nigeria achieved continued solid growth in a challenging environment.

MTN South Africa also reported a pleasing turnaround in its underlying consumer and enterprise business units.

Overall subscribers increased by 10.6-million to 261.5-million during the first six months of the year.

By the end of June, MTN had 102-million active data users and 38-million active Mobile Money users.

During the half-year under review, MTN invested R10.1-billion into its networks, focussing on capacity and resilience as the Covid-19 lockdown constraints impacted network rollout.

This brought a further 54-million people into third-generation and fourth-generation coverage.

The group did not declare an interim dividend owing to uncertainties resulting from the Covid-19 impacts.

“While we expect the remainder of the year to be shaped by the ongoing challenges presented by the pandemic, we believe that MTN will remain comparatively resilient and is poised to sustain its growth over the medium term,” Shuter concluded.

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