MTN Group is one step closer to exiting its business interests in the Middle East, announcing that it has received conditional approval from authorities in Kabul to sell its Afghanistan unit. The sale is expected to conclude by the end of 2023.
MTN, which has developed a reputation for conquering emerging-market countries that few dare to touch, is in the process of exiting businesses in the Middle East region — including Syria, Yemen and Iran — as part of a five-year slim-down plan unveiled in 2019 to reduce risk, sell noncore assets such as towers and masts, and raise about R25bn.
The Yemen and Syrian businesses were sold in 2021, with Iran being the only Middle East business that will be left for MTN.
As the group reported interim earnings to June on Monday, it said the process to exit Afghanistan “in an orderly fashion” through the sale of MTN’s entire shareholding to Investcom, an affiliate company of Singaporean telecoms company M1, had advanced in the period.
In June 2022, the group received a binding offer for the sale of MTN Afghanistan for about $25m (R475m), on a discounted basis.
“The transaction has now received conditional regulatory approval to proceed, pending the submission of relevant documentation to the Afghanistan Regulatory Authority. We expect to conclude our exit from Afghanistan in H2 2023.”
In the half year, the Afghan unit made R1.248bn in revenue and R368m in earnings before interest, tax, depreciation and amortisation for the group.
Founded with the help of the government in 1994, MTN built an emerging market powerhouse in the Middle East and Africa, but run-ins with regulators, competitors and rights groups brought sharper scrutiny of its business and prompted a rethink under group president and CEO Ralph Mupita.
MTN says it will keep the market “appropriately updated on any significant developments and the work on the IPO of MTN Irancell, which is anticipated to take place by the end of 2024.”
The first of the Middle East businesses the group exited was MTN Syriain August 2021. At the time, MTN said it had written off and abandoned the business after clashes with the government complicated its efforts to offload the unit.
The group attempted an entry into Ethiopia’s recently liberalised telecoms market, but chose not move further after losing a licence bid to rival Vodacom and its affiliate, Safaricom.
This comes as the company, valued at about R260bn on the JSE, reported a 7.3% increase in profit year on year to R11.2bn, while group service revenue grew 15.1% on a constant currency basis to R107.7bn for the period.
It also said a memorandum of understanding was signed with Mastercard which provides for the payments company to become a minority investor in MTN’s fintech business, with an enterprise value of about $5.2bn, and for Mastercard to help in expanding the payments and remittance services offered by the mobile operator.
MTN is also mulling the potential exit of MTN Guinea-Bissau, MTN Guinea-Conakry and MTN Liberia. Discussions “are continuing,” it said.
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