MTN Group achieved a gain of R287 million ($15.8 million) from the sale of its Guinea-Bissau subsidiary to Telecel, reflecting a strategic divestment from smaller markets. However, the disposal of MTN Guinea-Conakry incurred a loss leading to a reclassification of R1,370 million ($75 million) in accumulated foreign currency translation reserves. MTN aims to concentrate on key markets like Ghana, Cameroon, and Côte d’Ivoire, enhancing its operational focus.
MTN Group, the largest telecommunications provider in Africa, announced a significant gain of R287 million ($15.8 million) from the sale of its Guinea-Bissau subsidiary to Telecel. This divestment is a key component of MTN’s strategy to exit smaller markets in West and Central Africa (WECA) and focus on larger, more lucrative segments of the market.
The sale, which was duly approved by regulators, reflects MTN’s commitment to streamlining operations and optimizing its portfolio, as these smaller markets generated a mere 7.3% of the group’s revenue for 2023. In October 2023, MTN received a binding offer from Telecel for both MTN Guinea-Bissau and MTN Guinea-Conakry at a nominal rate of $1 per entity, and the final sale agreement was executed on December 15, 2023.
Despite the success in Guinea-Bissau, the sale of MTN Guinea-Conakry resulted in a loss. According to the company’s financial report for 2024, an accumulated foreign currency translation reserve (FCTR) loss of R1,370 million ($75 million) was reclassified to profit and loss at the time of disposal. The report also noted that since MTN Guinea-Conakry had a net liability position classified as held for sale, no further impairment was required based on its value.
The Guinea-Bissau operation had been struggling with financial issues, including a loan default of R171 million ($9.4 million) and was deemed insolvent in December 2023, as liabilities surpassed assets. Consequently, MTN aims to concentrate its efforts on major West African markets such as Ghana, Cameroon, and Côte d’Ivoire, which collectively contributed to 19% of its revenue for 2023.
In summary, MTN Group has effectively leveraged its divestment strategy by selling MTN Guinea-Bissau for a gain while also addressing losses from the disposal of MTN Guinea-Conakry. The group is transitioning its focus toward larger, more profitable West African markets, optimizing its operations amid challenges faced by its smaller subsidiaries.
Original Source: thecondia.com
