Africa’s largest mobile operator, MTN, is planning to exit the Middle East to focus more on the continent, with its first move to sell off its 75% stake in MTN Syria.
The company is looking to exit these markets in the next 3-5 years, and on Thursday, CEO Rob Shuter dismissed speculation that the Middle East exit had been forced in some way by the ongoing US court case against MTN Afghanistan.
“This is not some kind of fire sale. This will be done in a very orderly and responsible way over the next few years,” he said. “I wouldn’t say that the court case is a particular catalyst.
“The reality of these markets is that the combination of macroeconomic factors and the currency depreciation has meant that despite our progress in the markets, they are translating back as a very small contributor to the group. The operating environments are very complex across all of these regions with geopolitical uncertainty, with a lot of challenges around sanctions and regulatory matters,” said Shuter.
Shuter said MTN would exit those operations in two phases, first selling its subsidiaries in Syria, Afghanistan and Yemen.
The operator would then aim to sell its stake MTN Irancell, in which it holds 49%.
MTN’s Middle East operations contribute less than 4% to the group’s earnings before interest, taxation, depreciation and amortisation (ebitda) of R41.8bn in its half-year to end-June, while MTN Syria contributed 0.7%.
Ebidta is a measure of the underlying operational performance of a business, with MTN saying this measure grew 10.9% in constant-currency terms during its first half, and before various one-off items.
MTN’s headline earnings per share (heps) jumped 120.5% to 430c in its half-year to end-June, with the group benefiting from, among other things, positive foreign exchange gains in the period.
Profit after tax rose about 145% to R13.3bn.
Data revenue expanded by 32.7% in constant-currency terms, as data traffic surged by 91.5%, boosted by the increase in work-from-home and higher levels of online engagement brought about by the effects of Covid-19, the group said.
Subscribers increased by about 4% to 261.5-million.
In morning trade on Thursday, MTN’s share price was up 2.28% to R61.50, having fallen about a quarter in the year to date.
Update: August 6 2020
This article has been updated with additional information