Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Business of Tech

MTN offered $35M for Afghanistan operation

Article Image
Continuing with its plans to sell all of its operations in the Middle East and focus on its pan-African footprint, MTN has received an offer for its business in Afghanistan.

The announcement was made as part of the group's interim results for the six months ended June 30, 2022, which saw group service revenue tick up 14.8% to 92.5 billion South African rand (US$5.7 billion) – in constant-currency terms.

"We announced today that we've received a binding offer for 100% of MTN Afghanistan as part of our pan-African focus and Middle East exit, subject to completion of all [conditions] related to this binding offer," MTN Group CEO Ralph Mupita told journalists on a media call on Thursday morning.

He would not disclose the name of the company looking to buy the Afghanistan operation. But he said the deal would be worth gross proceeds of $35 million, to be paid over a period of time, and on a discounted basis would equate to about $31 million in gross proceeds.

"Our intention was to do an orderly exit of Afghanistan, and we were looking to maximize the proceeds we could get within the context of the macro [environment] within Afghanistan. So, we're very comfortable with the proceeds that we are going to receive – subject to concluding all the conditions precedent," he said.

Mupita said MTN had received a binding offer but was still going through the processes of concluding share purchase agreements and engaging with the Afghan regulator.

"We are really focused on reducing our footprint to a pan-Africa focus and also reducing the risk profile of the group. So, that may not have a financial value to it, but I think it does improve the risk-adjusted view on the group."

The completion of the transaction will conclude the exit of MTN's previously consolidated Middle East markets of Syria, Yemen and Afghanistan. Only Iran will remain, where MTN has a 49% financial investment in Irancell as part of a joint venture, which it said "will continue to be managed for value within the MTN portfolio".

Afghanistan had long been a headache territory for the group but it did manage to put a lingering terrorism complaint behind it last year after a US magistrate judge recommended that the case be dismissed.

Exit strategy

MTN's Middle East exodus has been a long time coming with the original plan for an "orderly exit" of its four operations in the region announced back in August 2020.

At its half year results two-years ago former CEO Rob Shuter said that it planned to sell its 75% stake in MTN Syria first. However that didn't quite pan out and MTN decided to abandon its telecoms operation in Syria in August 2021 saying that the regulatory actions and demands in Syria had made operating in the country "untenable."

This after its Syrian business was placed under judicial guardianship in February 2021.

The Yemen business, meanwhile, was sold in November 2021 to the group's minority shareholders in the country.

Robust results

MTN said it had been operating under challenging conditions in the six-months due to macroeconomic and geopolitical volatility, global supply chain disruptions, constrained on-grid power supply in South Africa and greater regulatory requirements across many markets.

Despite these the group's results were strong once again with reported headline earnings per share (HEPS) – considered the main profit measure in South Africa – increasing by 46.5% year-on-year (YoY), to 567 South African cents (34.4 US cents).

Group service revenue grew almost 15% supported by growth of 19.9% in Nigeria, 29% in Ghana, 10% in Uganda, 10.9% in Cameroon and 4.1% in South Africa.

The Group's earnings before interest, tax, depreciation and amortization (EBITDA) increased by 15.1% to R43.9 billion ($2.7 billion), before once-off items.

Ralph Mupita, MTN Group president and CEO. (Source: MTN Group).
Ralph Mupita, MTN Group president and CEO. (Source: MTN Group).

"Notwithstanding the tough macro conditions, MTN remained focused on investing in our markets to increase broadband coverage and to reduce the cost to communicate," said Mupita. "We accelerated network investment to R17.1 billion ($1.06 billion) and spent an additional R7 billion ($432 million) on securing 4G and 5G spectrum in the key markets of South Africa and Nigeria."

The investment in networks increased access to broadband services to 85.5% of the population and led to an average 22.5% reduction in data tariffs, MTN said.

MTN operates in 19 markets and has 281.6 million subscribers, an increase of 5.6% YoY.

"Growth in data revenue was particularly strong, up 35.9%, driven by MTN Nigeria, MTN Ghana, MTN Cameroon and MTN South Africa," explained Mupita, adding that fintech revenue also grew by 14%, with solid performances from Nigeria, Uganda and Ghana.

"The introduction of fintech taxes in some markets slowed revenue growth in Q2, but we remain encouraged by the ecosystem growth as users, agents and merchants continued to grow healthily during the period under review, with transaction volumes growing by 31.5% during the period," he said.

He told the media that the group was making progress on its plans to separate its fintech and fiber businesses from the traditional GSM business and had started the process of engagement with "select potential strategic investors" for the group fintech structure and hoped to conclude those deals by the end of the year.

Telkom SA talks continue

Mupita couldn't give much of an update on MTN's plans in South Africa to buy the entire issued share capital of fellow operator, Telkom SA.

"On Telkom we can't comment other than to say that we are having ongoing discussions with them," he said.

Last month the market learned of the possible deal that would see consolidation of the second- and third-biggest mobile operators in SA.

Want to know more? Sign up to get the weekly Connecting Africa newsletter direct to your inbox every Friday.

"What we can say, though, is that for some time we've been putting forward a point of view that consolidation across markets, is something over the medium term that we believe is inevitable," Mupita said.

"We are seeing the fixed mobile convergence theme playing out in developed markets, and also in developing markets such as Southeast Asia and Latin America. It's a trend that we cannot avoid on the African continent. If we are to be able to provide world class networks to Africans more generally, there is a level of capital investment that's going to be needed on a sustained basis," he concluded.

Related posts:

*Top image source: warrenski on Flickr CC 2.0

— Paula Gilbert, Editor, Connecting Africa

Innovation hub

New develoPPP Ventures funding program for SA startups

The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) has launched develoPPP Ventures, a new funding scheme offering up to €100,000 (US$106,950) for successful startups in South Africa.


Huawei using SA data centers to extend AI cloud adoption

Chinese multinational Huawei is using its three data centers in South Africa to extend artificial intelligence (AI) cloud adoption in the country.

More Innovation hub

Latest video

More videos

Partner perspectives

All Partner Perspectives

Sponsored video

More videos

Follow us on X

Industry announcements

More Industry announcements

Upcoming events

Cyber Revolution Summit
August 9, 2024
Gaborone, Botswana
Africa Tech Festival 2024
November 11-14, 2024
Cape Town, South Africa
More Upcoming events

Africa Tech Perspectives


Uber's Marjorie Saint-Lot on inclusion and sustainability in Africa

Uber's Country Manager for Ghana and Cote d'Ivoire, Marjorie Saint-Lot, shares how the ride-hailing company is approaching public-private partnerships, environmentally friendly initiatives and gender inclusion in Africa.


The 100 most influential African leaders in 2023

A new report from Africa Tech Festival and Connecting Africa puts a spotlight on the top 100 African leaders in the telecoms and technology sector in 2023.


Deep dive into East Africa's tech startup ecosystem

New survey reveals a lack of access to investors, reliance on international VCs and global recession trends as the biggest barriers for East African tech startups to access funds.

More Africa Tech perspectives

Guest Perspectives


Omdia View: May 2024

By Omdia Analysts

May 2024's telecoms highlights in the Middle East and Africa included African 5G subscriptions surpassing 5 million, growth from SpaceX's satellite Internet service Starlink, and a major fiber partnership in the Middle East and North Africa.


How e-mobility could transform Africa's transport sector

By Francis Hook

ICT analyst Francis Hook delves into Africa's e-mobility sector and unpacks the challenges faced locally and the benefits the move to electric vehicles could bring to urban transport systems.

More Guest Perspectives

Like us on Facebook

Newsletter Sign Up

Sign Up
Tag id test-002