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MTN quits multibillion-rand Syrian operations, seeks compensation

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MTN Group CEO Ralph Mupita.
MTN Group CEO Ralph Mupita.

MTN has quit Syria, abandoning its operations, saying the actions of the regulator have become toxic, making the business insupportable.

Africa’s largest mobile operator, which announced half-year results today, is now plotting legal action, seeking compensation.

The telco announced plans to exit the Middle East last year, but has been battling Syrian authorities after the company was placed under curatorship.

In March, MTN executive management was relieved of its duties and a Syrian court appointed the chairman of minority shareholder, TeleInvest, to manage the company’s day-to-day operations.

Today, CEO Ralph Mupita announced: “The group has initiated an exit of Syria, through abandoning the operation, given regulatory actions and demands that make operating in the market untenable. We reserve our rights to seek redress through international legal processes, given the actions of the Syrian authorities that have left us with no other choice than to exit.”

He adds that MTN is exploring options to exit Yemen and Afghanistan in an orderly manner.

Solid half-year results

Turning to the telco’s performance in the half-year ended June, Mupita says, notwithstanding the many challenges presented by the COVID-19 pandemic, MTN delivered solid half-year results, exceeding most of the group’s medium-term targets.

MTN Group service revenue grew by 2.1%. In constant currency terms, service revenue increased by 20% in the first half of the year to almost R82 billion, and earnings before interest, tax, depreciation and amortisation before one-off items increased by 24% to nearly R39 billion.

However, the telco reported a 10% drop in headline earnings per share to 387c in the period.

Mupita says the solid results were delivered despite a 2.3 million decline in the number of subscribers to 277.3 million, due to new industry-wide SIM registration regulations in Nigeria.

Excluding Nigeria, MTN group subscribers increased by 5.4 million, and Mupita expects subscriber growth to normalise over time, as more of MTN’s enrolment centres in Nigeria are certified for SIM registration.

In the six months under review, MTN’s active data subscribers increased by 3.1 million to 117.4 million.

Reviewing MTN’s platform businesses, Mupita says the number of monthly active users rose by 27.9% year-on-year (YOY) to 48.9 million for Mobile Money and by 299.7% YOY to eight million for Ayoba.

“The growth in these businesses is underpinned by the momentum in their underlying value drivers, which continued to trend strongly in the period.”

Further, he says, the work to structurally separate MTN’s fintech business by the end of first quarter 2022 is on track.

MTN has, in recent months, recorded increased uptake of its fintech business, signalling future growth, an opportunity MTN will be pursuing in the near future.

The telco currently has 47 million Mobile Money subscribers and plans to get to 100 million in the next five years. MTN is also getting a significant portion of its services revenue from fintech − 8% − and wants it to reach 20% by 2025.

Insurtech drive

Additionally, Mupita announced an insurtech alliance with Sanlam across Africa, which he says has the potential to change the face of insurance in Africa by leveraging the brand and reach of MTN, together with Sanlam’s licensing, insurance expertise and extensive footprint.

“Through this partnership, we will develop and distribute a comprehensive range of insurance, investment and savings products to MTN customers using digital channels. We believe this will support our ambition to scale our insurtech portfolio more rapidly in line with our Pan-African focus. Our insurtech business, through aYo, currently has 6.3 million active policies, with a 2025 target of 30 million policyholders.”

Looking ahead, Mupita says, MTN remains focused on executing on the “Ambition 2025” strategy, driving growth, deleveraging the holding company balance sheet and unlocking value, while navigating the impact of the pandemic.

“We maintain our group capex guidance of approximately R30.1 billion for the year, on current currency assumptions, as we remain committed to investing in the capacity and resilience of all our networks, as well as scaling our platforms to drive accelerated growth and achieving our medium-term targets.”

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