MTN Is Said to Mull West African Unit Sale in Markets Cull

JOHANNESBURG (Capital Markets in Africa) – MTN Group Ltd.’s sale of its Cyprus unit is just the start of a broader exit from small or problematic markets, with the Liberian unit leading a number of West African divisions being considered for disposal, according to people familiar with the matter.

Africa’s largest mobile-phone company by subscribers sees the Liberia, Guinea and Guinea-Bissau businesses as ones it could do without, said two of the people, who asked not to be identified as the information isn’t public. The review is being led by Chief Executive Officer Rob Shuter, who said in March he planned to evaluate whether the Johannesburg-based company needs a presence in all 22 markets in which it operates.

An MTN spokesman wouldn’t comment on market speculation.

MTN announced the sale of its Cyprus unit to French billionaire Xavier Niel’s Monaco Telecom SA on Monday for about 260 million euros ($302 million), the first country exit in the company’s 24-year history. Cyprus had the lowest number of subscribers of all MTN’s markets as of end March, though Liberia and Guinea-Bissau were close.

The only other MTN country division with fewer than 1 million customers is South Sudan, which has been engulfed in a civil war since 2013.

The sale of smaller markets could be laying the groundwork for an attempt to break into Angola, one of the people said. Africa’s No. 2 crude producerplans to sell a minority stake in state-owned telecommunications provider Angola Telecom and hold an auction for a fourth industry operator.

Meanwhile Ethiopia, Africa’s most-populous nation after Nigeria, is planning to sell parts of the state-owned telecommunications company to foreign investors, opening the door to a market long coveted by MTN and rival Vodacom Group Ltd.

MTN has struggled with regulators and governments across the continent in recent years, increasing the strain in certain markets. In Benin, the carrier in May agreed to pay 70 billion CFA Francs ($125 million) to settle a dispute over frequency fees and secure a five-year license extension. The company also had to hammer out terms for a new license in Cameroon, after agreeing to a $6.6 million penalty.

All that pales in comparison to MTN’s woes in Nigeria, where it was forced to pay a $1 billion fine in 2016 for missing a deadline to disconnect unregistered users amid a security crackdown. However, the carrier has repeatedly stated a commitment to its biggest market and that’s unlikely to change, the people familiar with the situation said.

Liberia has struggled to revive its economy after a yearlong Ebola outbreak earlier in the decade killed thousands and isolated the country. Gross domestic product contracted by 1.6 percent in 2016, according to World Bank data. New President George Weah, who took office in January, this week pledged to pursue “aggressive” monetary and fiscal policies as inflation soars and the Liberian dollar slumps.

Source: Bloomberg Business News