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MTN adjusts its presence in Africa

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MTN adjusts its presence in Africa

MTN has decided to divest its holdings in Guinea-Bissau and Guinea-Conakry to Telecel, signifying a significant shift in its market strategy. The South African telecommunications giant will now prioritize key emerging markets such as Ghana, Cameroon, Nigeria, and Côte d’Ivoire. These markets, excluding Cameroon, collectively contribute 18.6 % of the Group’s revenue.

MTN’s strategy shift

MTN, a prominent technology player in South Africa, has announced a substantial shift in its market strategy by divesting its stakes in Guinea-Bissau and Guinea-Conakry operations to Telecel. This decision represents a strategic turning point as MTN focuses on strengthening its African presence. Analysts within the Group identify more promising and strategically significant opportunities in the West and Central Africa region.

Agreement with Telecel

In December 2023, MTN agreed with Telecel, a telecommunications company with a significant presence in the African sector. Under this agreement, MTN is transferring control to Telecel. While the financial terms of the agreement remain undisclosed, MTN has committed to providing further details in the coming weeks.

This transaction underscores the South African company’s dedication to streamlining its business operations, mainly focusing on key markets such as Ghana, Cameroon, Nigeria, and Côte d’Ivoire. These countries are areas where MTN enjoys a robust presence and anticipates substantial growth.

MTN’s presence in West Africa

Currently, MTN has:

  • 77 million subscribers in Nigeria
  • 29 million subscribers in Ghana
  • 20 million subscribers in Côte d’Ivoire

Overall, the company boasts a subscriber base of 290 million across all its African markets.

The acquisition of MTN’s interests in Guinea-Bissau and Guinea-Conakry by Telecel potentially sets the stage for a new growth phase in these markets. MTN expresses confidence in Telecel’s capacity to drive technological and economic advancement, ensuring a seamless transition for customers, employees, and stakeholders.

MTN’s financial report for 2023 : Impacts of inflation

According to the company, its decision to withdraw from these markets stems from evaluating its West and Central Africa business portfolio. The telecommunications company’s 2023 financial report highlights the adverse effects of inflation and currency devaluation on its operations, particularly in Guinea-Bissau and Guinea-Conakry, where the company held a secondary market share.

The financial challenges associated with these situations were particularly evident in Guinea-Bissau, where the telecommunications giant faced economic difficulties, ultimately resulting in a loss of approximately 89.39 million USD due to negative EBITDA performance in 2023.

Plan to strengthen MTN’s Financial Foundation

By focusing on Ghana, Cameroon, Nigeria, and Côte d’Ivoire, MTN aims to capitalize on the combined contribution of these markets. This strategic pivot aims to bolster its financial foundation and operational efficiency, especially amidst a challenging economic backdrop in Nigeria characterized by inflation, currency devaluation, and a shortage of foreign exchange for businesses.

Moreover, MTN’s strategic scope is not broader than African affairs. The company has also divested its entire stake in the Afghanistan unit, transferring operations to Investcom AF. This decision comes with a six-month transitional services agreement, underscoring the telecommunications giant’s ongoing commitment to ensuring operational continuity and engaging stakeholders during this transition.

As MTN refines its strategy by focusing on target markets with solid growth prospects, the telecommunications sector in Africa is undergoing significant changes. Analysts will closely monitor how this realignment strengthens MTN’s operational resilience and financial health, as well as its implications for the telecommunications sector in Africa.

Headquartered in South Africa, MTN has a market capitalization exceeding 9.1 billion USD, offering data, voice, cloud, IoT, and other telecommunications services in Africa and the Middle East.

Sources :
https://techpoint.africa/fr/2024/03/26/telecel-take-over-mtns-west-africa/#:~:text=Le groupe MTN se retire,d’achat en décembre 2023.

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