MTN Group may offload non-core assets in Liberia, Guinea-Bissau, South Sudan

20 July 2018

Mergers, Acquisitions and Financial Results

South Africa-based MTN Group is considering the divestment of its subsidiaries in a number of markets, including those in Liberia, South Sudan or Guinea-Bissau, Bloomberg quotes unnamed sources within the company as saying.

The move comes in the wake of MTN’s sale of its Cypriot unit to Monaco Telecom – 55%-owned by French billionaire Xavier Niel – for EUR260 million (USD304 million), as the South African regional operator kicks off a divestiture programme in markets considered non-essential, too small or in other ways ‘problematic’.

In March 2018 Group CEO Rob Shuter said that his company was reviewing its portfolio ‘to make sure all divisions were self-funding and necessary parts of the business’. The Cypriot division, which was acquired in 2006 as part of MTN’s purchase of Investcom LLC, was considered non-essential to the Johannesburg-based carrier’s core business; it had 426,000 customers at the end of March 2018.

The unnamed sources suggest that the subsidiaries in question do not differ fundamentally from MTN Cyprus, in terms of having a relatively small customer base and low incomes. The Liberian unit reported revenue of ZAR637 million (USD47.8 million) in FY17, with a customer base of around 881,000, compared to South Sudan (ZAR157 million, 663,000) and Guinea-Bissau (ZAR489 million, 742,000) – all of which are a drop in the ocean in a company where consolidated revenues reached ZAR132.8 billion in the last financial year. Furthermore, the units are considered as being among the weakest in MTN’s African stable given their propensity for armed conflict, weak incentives for investment and sometimes unstable economic situation, all of which impacts on investor sentiment.

Source: Telegeography