MTN Group reported a $15.8 million gain from selling its Guinea-Bissau unit, while the disposal of Guinea-Conakry resulted in a $75 million loss. This divestment aligns with MTN’s strategy to focus on more profitable markets, particularly in West Africa, amid poor performances in smaller markets.
MTN Group, the largest telecommunications operator in Africa, has reported a profit of R287 million ($15.8 million) from the sale of its Guinea-Bissau subsidiary to Telecel. This sale is representative of MTN’s strategic plan to divest from smaller markets in West and Central Africa (WECA) and allocate resources toward more profitable regions. The decision follows the observation that these smaller markets contributed only 7.3% to the group’s revenue in 2023.
In October 2023, MTN accepted a binding offer from Telecel, involving nominal fees of $1 for both MTN Guinea-Bissau and MTN Guinea-Conakry. The sale transaction was officially concluded on December 15, 2023, with both entities classified as held for sale earlier on December 31, 2023. Despite the profit from the sale of Guinea-Bissau, MTN incurred a significant loss on the transfer of MTN Guinea-Conakry to the Guinean government, as disclosed in their 2024 financial report.
Specifically, the divestment of MTN Guinea-Conakry resulted in an approximated loss of R1,370 million ($75 million) in accumulated foreign currency translation reserves (FCTR). The report further explained, “On disposal of MTN Guinea-Conakry, an amount of R1 370 million ($75 million) accumulated foreign currency translation reserve (FCTR) loss was reclassified to profit and loss.”
The poor financial performance of MTN Guinea-Bissau was marked by a loan default of R171 million ($9.4 million) and insolvency by December 2023, highlighting its challenges. Nevertheless, MTN Group is set to refocus its efforts on more lucrative markets in West Africa, namely Ghana, Cameroon, and Côte d’Ivoire, which collectively accounted for 19% of the group’s 2023 revenue.
In conclusion, MTN Group’s strategic divestment from its operations in Guinea-Bissau represents a calculated shift towards more profitable markets in West Africa. The group’s $15.8 million gain from the sale contrasts sharply with the $75 million loss incurred from the Guinea-Conakry disposal. As MTN endeavors to streamline its operations, it will now concentrate on key markets that significantly contribute to its revenue.
Original Source: thecondia.com
