MTN to offload Middle East portfolio, return focus to Africa
Plans are afoot for Africa’s largest mobile operator, MTN, to exit the Middle East and focus on its burgeoning operations on the continent.
The company announced today that it is simplifying its portfolio and its Middle East operations, which contribute less than other regions to the group, will be offloaded.
The region is not a big money-spinner for the telco, bringing in less than 4% of the group’s earnings of R41.8 billion for the half-year to end-June, with MTN Syria contributing 0.7%.
“As part of our ongoing portfolio review, we believe the group is best served to focus in the future on our pan-African strategy. We will, therefore, be exiting the Middle East 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,” says outgoing group CEO Rob Shuter.
Besides contributing less to the group’s coffers, the Middle East operations have been problematic for MTN.
The telco is currently defending itself in a US court following fresh allegations in an amended lawsuit that MTN “was a particularly aggressive practitioner of protection payments” to terror group al-Qaida in Afghanistan.
MTN is being accused of violating US anti-terrorism laws.
In Iran, the mobile operator has repeatedly rebuffed bribery allegations following accusations by Istanbul-based Turkcell that MTN engaged in illicit activity to gain its GSM licence in Iran in 2005.
Turkcell claims MTN used bribery and corruption to overturn the initial Iranian decision so that the licence was awarded to Irancell, of which the MTN group owns 49%.
Turning to MTN’s overall performance in the first half of the financial year, Shuter says the operator added 11 million subscribers to reach a total base of 262 million, which, he says, was inspired by the group’s belief that everyone deserves the benefits of a modern connected life.
By end-June 2020, MTN had 102 million active data users and 38 million active Mobile Money users.
Shuter also says despite lockdown restrictions impacting network rollout, “MTN Group invested R10 billion in capital expenditure across our markets and brought a further 54 million people into 3G and 4G coverage. The focus on affordability of data saw the average rate per megabyte reduced by 34%.”
Addressing MTN matters related to the telco’s asset realisation programme, Shuter says the group made progress and concluded the disposal of the tower company investments in Ghana and Uganda for R8.8 billion.
MTN announced its asset realisation programme in March 2019, which the company says aims to simplify its portfolio, reduce debt and risk, improve returns and realise proceeds of at least R15 billion over three years.
In the period under review, MTN did not declare an interim dividend, citing the impact of the COVID-19 pandemic.
Shuter says MTN will consider a final dividend should conditions warrant such a move.
“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.”