MTN Group Limited has reportedly begun discussions on the “orderly exit” of its operations in three African nations.
The ICIR reports that the talks followed the group’s 2023 first quarter financial statements, where it revealed its plans to stop operations in the three African countries.
“Aligned with MTN’s portfolio optimisation focus within our Ambition 2025 strategy, the company continuously assesses our investments with the aim of improving returns and reducing risk.
“In line with this focus, MTN Group is evaluating an orderly exit of three operations in West Africa over the medium-term, namely MTN Guinea-Bissau, MTN Guinea-Conakry and MTN Liberia,” the Group stated in the financial statements.
The Group disclosed that it had received an offer for its equity interests in these “Opcos” (operating companies) from Axian Telecom, which was being evaluated.
According to the group’s President/chief executive officer, Ralph Mupita, the pan-African telecommunication giant is navigating a challenging operating environment from higher inflation and currency devaluation.
He said, “The blended inflation across our footprint remained elevated and averaged 18.5 per cent in Q1 2023, compared to 11.5 per cent in Q1 2022. Interest rates increased during the period as central banks acted to curb inflation.
“Higher inflation and interest rates weighed on consumers’ spending power and impacted business activity. Local currencies generally weakened against the dollar, and foreign exchange availability was limited in several of our key markets, affecting the pace of capital expenditure and our ability to upstream dividends and management fees.”
A look at some of the critical metrics showed that as of March 31, 2023, MTN’s combined subscriber base of the three countries represented approximately 6.1 million of the group’s total 291 million subscribers and contributed 0.7 per cent to its earnings before interest, taxes, depreciation, and amortisation (EBITDA).
An EBITDA is widely used to assess a company’s performance.
In its recently released third-quarter financial statement, the MTN Group reported a net foreign exchange loss of N232.83 billion, compared to N27.87 billion in 2022.
This impacted its profit for the period, dropping by 45.23 per cent to N147.36 billion from N269.04 billion as of September 2022.
“The group is mainly exposed to fluctuations in foreign exchange rates in respect of the US dollar, being the significant foreign denominated currency,” MTN stated in its report.
Like the other subsidiaries, MTN Guinea-Bissau had breached a loan covenant due to negative EBITDA performance in 2022 with no formal waiver provided by the lender.