MTN Group reported a $15.8 million gain from the sale of its Guinea-Bissau subsidiary to Telecel, while incurring a $75 million loss on the disposal of Guinea-Conakry. This decision aligns with MTN’s strategy to focus on larger, more profitable markets in West Africa.
MTN Group, the largest telecommunications provider in Africa, recently reported a gain of R287 million (approximately $15.8 million) from the sale of its Guinea-Bissau subsidiary to Telecel. This divestment is part of MTN’s broader strategy to streamline operations and focus on more lucrative markets, as the smaller West and Central African markets contributed merely 7.3% to the group’s revenue for 2023.
The transaction, which received regulatory approval, followed a binding offer accepted by MTN in October 2023 for both MTN Guinea-Bissau and MTN Guinea-Conakry, with each entity valued at a nominal sum of $1. The sale agreement was finalized on December 15, 2023, with both businesses classified as held for sale as of December 31, 2023.
While the sale of Guinea-Bissau yielded a profit, the corresponding disposal of MTN Guinea-Conakry to the Guinean government incurred a loss. MTN Group’s 2024 financial results indicated a reclassification of R1 370 million ($75 million) in accumulated foreign currency translation reserve losses into profit and loss from this transaction.
MTN Guinea-Bissau was affected by various financial issues, including a loan default amounting to R171 million ($9.4 million) and insolvency by December 2023, where its liabilities surpassed its assets. The company will now shift its focus towards key West African markets such as Ghana, Cameroon, and Côte d’Ivoire, which constituted 19% of its revenue in 2023.
In summary, MTN Group has successfully divested its subsidiary in Guinea-Bissau, realizing a gain of $15.8 million, while simultaneously recording a significant loss on the sale of its Guinea-Conakry operations. This strategic move reflects the company’s intention to concentrate resources on more promising markets in West Africa, which have proven to be more profitable and aligned with its growth objectives. The challenges faced by both subsidiaries highlight the complexities of operating in smaller markets.
Original Source: thecondia.com
