MTN Set to Shut Down Services in Two African Countries as Another Firm Moves to Take over
- One of Africa’s top telecoms providers, MTN, has signalled plans to exit Liberia, Guinea-Bissau and Guinea-Conakry
- The company said the plan came due to financial constraints caused by inflation and currency devaluation
- It stated that it would sell its stakes to another telecoms provider, Telecel, in those countries and focus on more robust markets
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Due to market challenges, Africa’s telecoms giant, MTN, has revealed plans to leave Guinea-Bissau, Guinea-Conakry, and Liberia.
According to Ralph Mupita, the telecom’s CEO, inflation and currency across several markets are responsible for the move.
Source: Getty Images
MTN gives reasons for exit decision
A report says MTN holds about 30% of the market share in Guinea-Bissau and Guinea-Conakry.
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Per the report, financial struggles started in Guinea-Bissau due to a breach of a loan contract, arising from negative EBITDA performance, leading to a reported loss of $89.392 million in the company’s annual report.
The plan to shut down these markets will allow the telecom provider to focus on more robust markets like Ghana, Cameroon, Nigeria, and Cote d’Ivoire in West and Central Africa.
The markets contribute about 18.6% to MTN’s revenue, compared to the 7.3% from other African countries.
MTN Nigeria records FX loss
MTN stated that it encountered forex losses in Nigeria due to a challenging business environment, rising inflation and the naira crash.
The company said it recorded a loss of N740.4 billion due to the naira devaluation in June and February this year.
TheCable reports that MTN’s operating cost rose by 341.9% to N951.5 billion due to increased borrowing, higher interest rates, and a devaluation of the naira from N461 per dollar in early 2023 to N907 in December 2023.
Outside Africa, MTN also divested its stake in MTN Afghanistan to Investcom AF and has begun a six-month transitional services agreement.
The telecoms giant said it had finalised a share purchase agreement with Telecel, a telecoms provider, to acquire MTN ownership interests in Guinea-Bissau and Guiniea-Conakry.
The company disclosed this in its 2023 financials and is based on various conditions.
New company to take over MTN
MTN said:
“As we advance through this transition, MTN is focused on ensuring a smooth and seamless transition for our customers, employees and all other stakeholders,” the financials read in part.
Telecel became the top choice for strategically expanding and advancing ventures and fostering technological and economic advancement in those regions.
The parties did not disclose the value of the transactions, but MTN has promised to provide further updates.
During the recent internet outage across many African countries, MTN was one of the first telcos in Nigeria to restore services quickly,
The outage disrupted banking and other services across Nigeria and West African countries.
The company also reportedly disconnected over 40 million subscribers in Nigeria due to the ongoing NIN-SIM linkage ordered by the Nigeria Communications Commission.
Outage: MTN, Airtel, and other telcos finally set a date for 100% service
Legit.ng had reported that the Association of Licensed Telecommunications Operators of Nigeria (ALTON) said that voice and data services affected by the undersea cable cut along the Ivorian coast and Senegal would be restored fully on Tuesday, March 19, 2024.
Gbenga Adebayo, the chairman of ALTON, disclosed this on Monday, March 18, 2024.
On Thursday, March 14, 2024, the undersea cable supplying broadband internet to Nigeria and other West African countries forced several banks, financial institutions, telcos, and other firms to scale down operations.
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Source: Legit.ng
