MTN Group Highlights Strategic Divestment with Guinea-Bissau Sale and Loss in Guinea-Conakry

MTN Group reported a gain of R287 million from the sale of its Guinea-Bissau unit while incurring a loss of R1 370 million from the disposal of MTN Guinea-Conakry. The sales align with MTN’s strategy to shift focus from smaller markets to larger West African markets, which contribute more significantly to revenue.

MTN Group, the leading telecommunications operator in Africa, has reported a gain of R287 million ($15.8 million) from the sale of its Guinea-Bissau subsidiary to Telecel. This initiative aligns with MTN’s strategy to divest from less profitable West and Central African markets, which collectively contributed only 7.3% to the company’s revenue in 2023.

The sale, which received necessary regulatory approvals, is part of MTN’s efforts to streamline operations and prioritize larger markets. In October 2023, MTN accepted a binding purchase offer from Telecel for its subsidiaries in both Guinea-Bissau and Guinea-Conakry, with a nominal sale value of $1 per entity. The transaction culminated in a finalized agreement on December 15, 2023, after both subsidiaries were classified as held for sale.

While the Guinea-Bissau transaction resulted in a financial gain, the sale of MTN Guinea-Conakry led to a significant loss. Financial results for 2024 indicated a reclassification of a loss amounting to R1 370 million ($75 million) in accumulated foreign currency translation reserve (FCTR) in relation to the Guinea-Conakry disposal.

The financial standing of MTN Guinea-Bissau had been precarious, marked by a loan default of R171 million ($9.4 million) and insolvency as of December 2023, when liabilities surpassed assets. Moving forward, MTN will direct its focus towards key West African markets such as Ghana, Cameroon, and Côte d’Ivoire, which collectively represented 19% of the company’s revenue in 2023.

MTN Group’s divestment of its Guinea-Bissau subsidiary marks a significant step in its strategic focus on larger, more profitable markets. The financial outcomes of these sales underscore the complexities of operating in smaller markets, with losses incurred in Guinea-Conakry contrasting sharply with gains from Guinea-Bissau. Ultimately, MTN aims to enhance its performance in core West African markets which contribute substantially to its overall revenue.

Original Source: thecondia.com