MTN Group reported a $15.8 million gain from selling its Guinea-Bissau subsidiary to Telecel as part of a strategy to focus on profitable markets. While this sale was successful, MTN incurred a loss on the disposal of MTN Guinea-Conakry. The company aims to concentrate on larger West African markets that significantly contribute to its revenue.
MTN Group, Africa’s leading telecommunications provider, announced a gain of R287 million ($15.8 million) from the sale of its Guinea-Bissau subsidiary to Telecel. This divestiture is part of MTN’s strategic plan to exit smaller markets in West and Central Africa (WECA) and focus on more profitable ventures. The smaller markets collectively contributed only 7.3% to MTN’s revenue in 2023.
The transaction received regulatory approval, and in October 2023, MTN accepted a binding offer from Telecel for both MTN Guinea-Bissau and MTN Guinea-Conakry, with each subsidiary valued at a nominal fee of $1. The final agreement was executed on December 15, 2023, after both units were designated as held for sale as of December 31, 2023.
Despite the successful sale of Guinea-Bissau, MTN incurred a loss from the disposal of MTN Guinea-Conakry, leading to a reclassification of R1 370 million ($75 million) of accumulated foreign currency translation reserves to profit and loss. This detail was disclosed in MTN Group’s 2024 financial results, noting that no further impairment was necessary.
MTN Guinea-Bissau experienced significant financial difficulties, marked by a R171 million ($9.4 million) loan default and subsequent insolvency in December 2023, with its liabilities surpassing its assets. Following these developments, MTN plans to focus its efforts on the larger West African markets, such as Ghana, Cameroon, and Côte d’Ivoire, which represented 19% of its revenue for 2023.
In summary, MTN Group’s recent strategic sale of its Guinea-Bissau subsidiary resulted in a notable financial gain, underscoring its intention to concentrate on more lucrative markets in Africa. However, the company faced a loss in its transaction involving MTN Guinea-Conakry, highlighting the challenges within smaller markets. Moving forward, MTN will prioritize operations in key territories that offer greater revenue potential.
Original Source: thecondia.com
