MTN to exit Afghanistan, possibly three African countries

MTN announced today that it is set to exit Afghanistan by the end of 2023 and is considering pulling out of three West African markets.

MTN released a trading update for the third quarter ended 30 September 2023 today, which revealed a resilient performance despite some challenges for the telecoms giant.

Group service revenue grew by 9% as a 0.6% decline in voice revenue was bolstered by data revenue growth of 15.3%.

The company told shareholders that the processes to exit select markets within the portfolio “remains on track”. 

“The process to exit Afghanistan is in the regulatory approval stages and remains on track to be finalised by year-end,” MTN said.

Exiting Afghanistan is part of MTN’s five-year plan to slim down the business, which includes withdrawing from the Middle East.

In 2019, MTN announced a $1 billion divestment programme to slim down the company, reduce risk, sell non-core assets and refocus on its high-growth markets.

Since 2019, MTN has exited Syria and Yemen. When its Afghanistan exit is complete, Iran will be the company’s last Middle Eastern business remaining.

In June 2022, the group received a binding offer for the sale of MTN Afghanistan for about $25 million (R459.58 million) on a discounted basis, Business Day reported.

In the trading update released today, MTN said discussions are also ongoing regarding the potential orderly exit of three of its smaller operations in West Africa.

This includes MTN Guinea-Bissau, MTN Guinea-Conakry and MTN Liberia.

This comes as the telecoms giant is facing headwinds at some of its African operations, particularly in Nigeria.

The devaluation of the Nigerian naira over the past few months has impacted the company’s balance sheet through significant foreign exchange losses.

In October of this year, MTN revised its estimate of unrealised foreign exchange losses in Nigeria.

MTN Nigerian unit recognised additional unrealised foreign-exchange losses on outstanding matured trade obligations and increased net finance costs for the six months through June after incorrectly measuring them before.

That means MTN Group’s earnings per share for the first half were also restated and are now 13% lower than the company reported previously.

Nigeria is MTN’s biggest market by subscribers, and the Lagos-listed unit MTN Nigeria Communications contributes more than a third of the group’s total revenue.

The company is also involved in a tax battle over an order by the Nigerian Tax Appeal Tribunal to pay $47.8 million (R878.68 million) in taxes. The evaluation pertains to a value-added tax assessment for the periods covering 2007 and 2010-17.

“Having reviewed this outcome and considering input from tax and legal consultants, MTN Nigeria has resolved to appeal the decision,” the company said.