Africa’s leading telecommunications giant, MTN, has struck a share purchase deal with Telecel, an Africa-focused telecommunications service provider, to divest its equity stakes in MTN Guinea-Bissau and MTN Guinea-Conakry.
The agreement, reached in December 2023, is subject to several conditions precedent and aims to streamline MTN’s operations in the region.
This news comes a few weeks after Telecel secured $20 million from Africa Credit Opportunities Fund (ACOF), a private credit firm, to expand its operations in West Africa.
MTN’s Strategic Move
The decision to sell its stakes in Guinea-Bissau and Guinea-Conakry is part of MTN’s broader strategy to prioritize its operations in stronger markets within the West and Central Africa region.
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According to the company’s financial report for 2023, these markets, including Ghana, Cameroon, Nigeria, and Cote d’Ivoire, collectively contribute 18.6% to the group’s overall revenue, compared to 7.3% from other West and Central African countries.
Rationale Behind the Sale
MTN cited Telecel’s significant presence and expertise in the African telecommunications market as a key factor in the decision.
The company believes that Telecel is well-positioned to drive the growth and further development of these operations, contributing to technological and economic progress in these markets.
As stated in MTN’s financial report, “As we advance through this transition, MTN is focused on ensuring a smooth and seamless transition for our customers, employees and all other stakeholders.“
Smooth Transition Assured
MTN has assured a smooth and seamless transition for its customers, employees, and all other stakeholders during this process.
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The company has committed to providing further updates regarding the transaction as appropriate, although the value of the sale remains undisclosed.
Market Performance and Challenges
MTN’s potential exit from Guinea-Bissau, Guinea-Conakry, and Liberia was hinted at in its financial reports, which revealed numerous challenges across the West and Central Africa region.
These challenges included signs of inflation and currency devaluation across several markets, as well as financial difficulties in Guinea-Bissau due to a breach of loan covenant and negative EBITDA performance, resulting in a reported loss of $89,392,809.
Beyond the African continent, MTN has also divested 100% of its shares in MTN Afghanistan to Investcom AF and has entered into a six-month transitional services agreement.
As MTN continues to optimize its operations and focus on its strongest markets, the sale of its stakes in Guinea-Bissau and Guinea-Conakry to Telecel is a strategic move that aligns with the company’s long-term growth objectives.
