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MTN to exit Middle East to focus on Africa

The CEO of the MTN Group says the firm had a good position in its Middle Eastern markets but this was a very small contributor in a very complex environment

The MTN Group will be leaving the Middle East in the medium term and focusing its strategy on African markets, the company’s chief executive officer has said.

Rob Shuter said the group is in advanced talks to sell its stake in MTN Syria to TeleInvest, which holds the other 25% of the business.

“We felt we were best served in the medium term to rather focus our energies in our core African markets that are closer to home,” Shuter said.

Volatile region

Shuter cited losing money on falling regional currencies, the Middle East’s volatile geopolitics and problems with Western sanctions as reasons for bowing out from the region.

MTN’s entry into the region has been marred by allegations, which it has denied, that it used bribes to win a 15-year operating licence in Iran and that it assisted militant groups in Afghanistan.

The company’s Middle East assets contributed less than 4% to group earnings before interest, taxes, depreciation and amortisation in the first half of the year, which ended 30 June.

US sanctions have made it harder to repatriate cash from the firm’s Iran joint venture.

Shuter said the initial focus will be on leaving Syria, Afghanistan and Yemen, and that the company planned to divest its 49% minority holding in Irancell over time.

Strong performance

Headline earnings per share (HEPS) more than doubled in the first half to 430 cents, beating analyst estimates of 271 cents. Service revenue rose 9.4% on strong demand for data and financial and digital services during the coronavirus lockdown.

Data revenue rose 32.7% in the first half, while digital increased 24.6% and fintech revenue climbed 18%.

MTN has filed with the New York Stock Exchange to prepare for a secondary sale of shares in the African online retailer Jumia, in which it has a 18.9% stake, Shuter said.

The sale is part of the group’s US$1.42 billion divestment plan, aimed at simplifying its portfolio over the next three to five years.

MTN is also in advanced talks to sell its 20% shareholding in Belgium’s Belgacom International Carrier Services SA.

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