This is as MTN Group revealed that it has accepted an undisclosed offer from Africa-focused telecommunication service, Telecel, for the sale of its equity interests in MTN Guinea-Bissau and Guinea-Conakry.
Telecommunication giant, MTN Group, has revealed that it looks to exit African countries it described as smaller markets in the West and Central Africa region.
This is as MTN Group revealed that it has accepted an undisclosed offer from Africa-focused telecommunication service, Telecel, for the sale of its equity interests in MTN Guinea-Bissau and Guinea-Conakry.
MTN made the revelations in its 2023 financials, as its spokesperson confirmed the sale of the business segments but declined to speak on how much the sale would cost.
MTN in the report said its Guinea-Bissau and Guinea-Conakry businesses have been classified as held for sale as of December 31, 2023.
A note in its financials reportedly said that “Telecel, an established telecoms operator with a significant presence in Africa, is well positioned to drive the growth and further development of these operations and contribute to technological and economic progress in these markets.”
It was reported that this move will allow MTN to focus on Ghana, Cameroon and Cote d’Ivoire, which are stronger markets in the West and Central African region that collectively contribute 18.6% to its revenue, over other West and Central African countries that contribute 7.3% to the revenue of the group.
Whereas the value of the sale remains undisclosed, MTN has said further updates regarding the transaction will be provided as at when due.
But it has been noted that the new development will enable MTN to prioritise its operations in stronger markets such as Ghana, Cameroon, and Cote d’Ivoire in the West and Central Africa region.
MTN noted that the agreement was reached in December 2023 and is subject to several conditions precedent, adding that Telecel, an established telecoms operator with a significant presence in Africa, is well-positioned to drive the growth and further development of these operations and contribute to technological and economic progress in these markets.
The Telecom group further stressed its potential exit from Guinea-Bissau, as the Chief Executive Officer (CEO), Ralph Mupita, cited signs of inflation and currency devaluation across several markets as part of the group’s reasons.
MTN across these countries, controls a secondary chunk of the market share up to about 30 percent in Guinea-Bissau and Guinea-Conakry.
MTN in Guinea-Bissau, experienced financial difficulties following a breach of loan covenant due to negative EBITDA performance, reporting a loss of R1.69 billion ($89,392,809) in its annual report.
These markets collectively contribute 18.6 percent to MTN’s revenue, compared to other West and Central African countries, which contribute 7.3 percent to the firm’s overall revenue.
The company’s audited financial results for the year ended December 31, 2023 in Nigeria, reportedly showed that it witnessed a very challenging operating environment characterised by rising inflation, currency devaluation and foreign exchange shortages.
Introduction:
You might have heard that MTN, the telecom giant, is pulling out of some countries. It's a big deal, and there are real human reasons behind it. Let's take a closer look at why this is happening.
Market Conditions:
Picture this: you're running a business, and you want to see it grow and thrive. But sometimes, the markets just don't play along. Maybe the economy in a particular country isn't doing well, or there's not much room for growth. For MTN, it's like realizing you've hit a dead end and need to find a new path.
Regulatory Challenges:
Now imagine you're trying to do your job, but the rules keep changing. It's frustrating, right? That's what MTN faces in some countries – governments shifting the goalposts, making it hard to plan ahead. When the rules are constantly up in the air, it's tough to run a business smoothly.
Competitive Pressures:
Think about being in a race where everyone else is sprinting, and you're struggling to keep up. That's the reality for MTN in some places, where competition is fierce. If you're not winning customers or making money, it might be time to bow out gracefully.
Strategic Focus:
Every now and then, you need to take a step back and ask yourself: where do we want to go from here? MTN is doing just that – reevaluating its game plan and deciding where to focus its energy. Sometimes, that means letting go of things that aren't working anymore.
Operational Challenges:
Imagine trying to do your job, but everything keeps going wrong. Maybe the internet keeps crashing, or the money you're making isn't worth the hassle. That's the kind of headache MTN faces in some countries, where running a business feels like pushing a boulder uphill.
Reputation Risks:
Now, think about your reputation – how people see you and what they think about your brand. MTN cares about its image, and it's not keen on being associated with controversy or shady dealings. If staying in a country means risking its reputation, it might be better to walk away.
Conclusion:
At the end of the day, MTN's decision to exit certain countries isn't just about numbers on a balance sheet. It's about real people facing real challenges – from shifting regulations to fierce competition and everything in between. By understanding the human side of this story, we can appreciate the complexity of MTN's decision and the impact it has on employees, customers, and communities.
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