MTN to exit Syria & Iran to focus on being a pan-African telecoms

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Cell phone network operator MTN says it is focusing its future strategy on its African markets, where growth has been strong.

MTN plans to sell its operations in the Middle East as it focuses on its African business. It is already in advanced talks to dispose of its 75% in MTN Syria and will also exit its operations in Afghanistan and Yemen, with MTN Irancell to follow.

Releasing results for the first half of its financial year, the mobile network operator said the exits would be conducted in an orderly manner over the medium term. Its operations in the Middle East contributed less than 4% to group earnings before interest, tax, depreciation and amortisation (EBITDA) over the period, with Syria contributing just 0.7%. EBITDA is seen as a key indicator of a company’s operational profitability.

The group’s performance for the period was driven by larger businesses MTN Nigeria and MTN Ghana, with MTN SA reporting a ‘pleasing’ turnaround in its underlying consumer and enterprise business units. The group added 10.6 million subscribers in the first six months of the year, taking its total subscriber base to 262 million across 21 operations. By the end of June, it said it had 102 million active data users and 38 million active Mobile Money users.

MTN said it continued to make progress with its asset realisation programme, which aimed to reduce debt, simplify its portfolio and realise capital of at least a further R25 billion over three to five years. Over the period it concluded the sale of its tower company investments in Ghana and Uganda for R8.8 billion. Following the disposals, it said the full R15 billion of the initial three-year plan had been realised within the first 12 months.

Service revenue rose 9.4% to R80 billion over the six months to end-June, led by growth in its Nigerian and Ghanaian businesses. MTN SA recorded a 2.5% decline after a roaming agreement with Telkom was discontinued and the effects of the continued accounting for Cell C’s agreement on a cash basis. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 11% to R42 billion. Earnings per share, including the gain on the disposal of the tower investments, rose 165% to 674c. Headline earnings per share after non-operational items were up 54%.

MTN said its balance sheet and liquidity remained resilient despite the challenging environment and was supported by strong operating free cash flows, which increased by 118%. However, it hasn’t declared an interim dividend due to the continued uncertain impact of Covid-19 on its operating environment, saying it would consider a final dividend should conditions warrant. This would be no more than 390c per share, aligned to its current dividend policy.

While we expect the remainder of the year to be shaped by the ongoing challenges presented by the pandemic, we believe that MTN will remain comparatively resilient and is poised to sustain its growth over the medium term,” president and CEO Rob Shuter said.

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