MTN Group has today announced that it will no longer have any operations in the Middle East, the news comes a few years after the telecom giant shifted its headquarters from Dubai to South Africa.
The Middle East “environment is becoming increasingly complex and it contributes less to the group’s earnings,” Chief Executive Officer Rob Shuter said Thursday.
Africa’s telecom giant is used to working in certain risky markets, which in some instances has left it vulnerable to legal entanglements, unpredictable politics, and regulatory crackdowns. In Iran, the company has been involved in a years-long legal battle over a telecom license, although no claims have succeeded. According to Bloomberg, in Afghanistan, MTN moved to get claims dismissed that it was involved with payments to the Taliban to protect its infrastructure.
Shuter said in an interview that this adds to the complexity of operating in these markets and the real issue is the economics of the businesses. He added;
“We used to say that the conflict markets were not consuming any of our capital and could still be good contributors if the situation turned around, they have become small in our lives, but it could be significant in the hand of another company.
MTN will exit the Middle East in a phased manner, with its three consolidated subsidiaries in Yemen, Afghanistan and Syria earmarked to be sold first. These markets only contribute about 4% to the group’s earnings before interest, depreciation, taxation and amortization(EBIDTA), said Shuter on a call with reporters. Talks to sell the 75% shareholding in MTN Syria are advanced, he said.
In the short term, MTN group will also dispose of its 49% stake in Irancell, one of its largest markets. The disposal will take three to five years, “so it will not be a fire-sale process,” Shuter said. Once the exit is completed, the company will have 17 markets in Africa.
ALSO READ: MTN Uganda Sells Tower Assets
MTN has been on a drive to dispose of assets to generate cash to reduce debt. In January this year. MTN Group announced that it had finalized an agreement to dispose of its 49% equity holdings in MTN Uganda and Ghana Tower Company investments to a subsidiary of American Tower Company for $523 million. This transaction was closed in Q1 2020. MTN Uganda sold off all its tower assets to American Tower Company (ATC).
It has managed to make $867 million with disposals and aims to realize a further 25 billion rand over the next three to five years, the group said as it reported first-half results on Thursday.
“We have been aiming for a sensible evolution and continuation of the strategy that we have been working on in the past few years, while making space for the incoming CEO to make their own mark in terms of how they want to position the company,” said Shuter.
