MTN Group reported a $15.8 million gain from selling its Guinea-Bissau subsidiary to Telecel and incurred a $75 million loss from the sale of MTN Guinea-Conakry. This divestment aligns with MTN’s strategy to focus on larger, more profitable markets post-sale, as smaller markets contributed minimally to its revenue.
MTN Group, a major telecommunications operator in Africa, recently reported a gain of $15.8 million from the sale of its Guinea-Bissau subsidiary to Telecel. This sale, receiving the necessary regulatory approval, is part of MTN’s strategic move to divest from smaller markets in West and Central Africa, which represented only 7.3% of its total revenue in 2023.
In October 2023, MTN agreed to a binding offer from Telecel for both MTN Guinea-Bissau and MTN Guinea-Conakry, with the nominal consideration of $1 for each entity. This agreement was finalized on December 15, 2023, following the classification of both businesses as held for sale at the end of the same month.
While the sale of MTN Guinea-Bissau resulted in a profit, the disposal of MTN Guinea-Conakry led to a significant loss. The financial records indicate that a loss of approximately $75 million was reclassified to the profit and loss statement due to accumulated foreign currency translation reserves at the time of the transaction.
The valuation for MTN Guinea-Conakry indicated a net liability status, leading to no additional impairment being recognized against its carrying amount or any fair value adjustments needed. Financial difficulties plagued MTN Guinea-Bissau, including a loan default of $9.4 million and insolvency, where liabilities substantially exceeded assets.
Moving forward, MTN plans to focus on more lucrative West African markets like Ghana, Cameroon, and Côte d’Ivoire, which combined contributed to 19% of the company’s revenue in 2023, redirecting their strategic efforts in those regions.
MTN Group’s divestment from Guinea-Bissau marked a strategic step to optimize operations by exiting underperforming markets. While the sale yielded a profit, losses from MTN Guinea-Conakry underscored the challenges faced by the company in the region. By shifting focus to profitable markets, MTN aims to enhance its operational efficiency and future revenue streams.
Original Source: thecondia.com
