MTN Group realized a $15.8 million gain from selling its Guinea-Bissau subsidiary while incurring a loss from its Guinea-Conakry unit. This reflects a strategic move to concentrate on more profitable markets amid financial struggles in smaller West and Central African markets, which contribute minimally to overall revenue.
MTN Group, the leading telecommunications operator in Africa, gained $15.8 million (R287 million) from selling its Guinea-Bissau subsidiary to Telecel. This strategic divestment is aimed at focusing on larger and more profitable markets in West and Central Africa (WECA), as smaller markets only contributed 7.3% of MTN’s 2023 revenue.
In October 2023, MTN signed a binding offer from Telecel for both MTN Guinea-Bissau and MTN Guinea-Conakry, with a nominal payment of $1 for each entity. The final sale and purchase agreement was completed on December 15, 2023, following the classification of these businesses as held for sale on December 31, 2023.
While the sale of Guinea-Bissau yielded a profit, the sale of MTN Guinea-Conakry to the Guinean government resulted in a loss. MTN Group’s financial results for 2024 indicated a reclassification of a loss of R1,370 million ($75 million) from the foreign currency translation reserve (FCTR) to profit and loss following this disposal.
The classification of MTN Guinea-Conakry as held for sale also clarified that no further impairment was noted due to the net liability position. Moreover, MTN Guinea-Bissau was facing significant financial difficulties, including a R171 million ($9.4 million) loan default and insolvency by December 2023, where its liabilities exceeded its assets.
MTN is now directing its efforts toward major West African markets such as Ghana, Cameroon, and Côte d’Ivoire, which collectively made up 19% of the group’s 2023 revenue.
In summary, MTN Group successfully divested from its Guinea-Bissau subsidiary yielding a gain of $15.8 million, aligning with its strategy to focus on profitable markets. However, the loss incurred from the sale of MTN Guinea-Conakry highlights challenges within this sector. The company’s strategy is now centered on strengthening its presence in key West African markets, which are more lucrative for its growth prospects.
Original Source: thecondia.com
