MTN Group realized a gain of $15.8 million from selling its Guinea-Bissau subsidiary while incurring a $75 million loss on the sale of Guinea-Conakry. The group aims to focus on profitable West African markets following these transactions, which reflect its strategic shift away from smaller, less impactful markets.
MTN Group, the leading telecommunications operator in Africa, has reported a gain of R287 million (approximately $15.8 million) related to its foreign currency translation reserve (FCTR) after selling its subsidiary in Guinea-Bissau to Telecel. This divestment is in line with MTN’s strategy to reduce its presence in smaller markets within West and Central Africa (WECA), where contributions to revenue are minimal, accounting for only 7.3% of the group’s total revenue in 2023.
In October 2023, MTN accepted a binding offer from Telecel for its operations in both Guinea-Bissau and Guinea-Conakry, with each entity valued at a nominal fee of $1. The finalization of this sale and purchase agreement occurred on December 15, 2023, following the classification of these businesses as held for sale on December 31, 2023.
Although the sale of Guinea-Bissau yielded a profit, the disposal of MTN Guinea-Conakry to the Guinean government resulted in a significant financial loss. According to MTN Group’s 2024 financial results, a loss amounting to R1,370 million ($75 million) was reported due to the reclassification of FCTR as profit and loss upon disposal.
The subsidiary in Guinea-Bissau was struggling financially, having defaulted on a loan of R171 million (approximately $9.4 million) and facing insolvency as of December 2023 due to liabilities surpassing assets. MTN Group now intends to direct its focus towards more lucrative markets in West Africa, specifically Ghana, Cameroon, and Côte d’Ivoire, which comprised 19% of the company’s revenue in 2023.
In summary, MTN Group’s strategic decision to sell its subsidiary in Guinea-Bissau generated a profit, while the divestment of Guinea-Conakry resulted in a substantial loss. This reflects MTN’s commitment to streamline operations and concentrate on more profitable regions, particularly in West Africa, where future growth potential appears robust.
Original Source: thecondia.com
