MTN Group, Africa’s leading telecommunications provider by subscriber base, has finalized the sale of its Guinea-Bissau subsidiary to Telecel, a Mexico-based telecom operator. This move follows regulatory approval and is in line with MTN’s strategic decision to divest from smaller markets in West and Central Africa, which together contributed just 7.3% to the company’s revenue in 2023.
The Divestiture Strategy
The sale is part of MTN’s broader strategy to exit smaller, less profitable markets and focus on larger, more lucrative operations. According to MTN’s 2023 annual report, the group identified Guinea-Bissau and Guinea-Conakry as markets that no longer aligned with its growth objectives. In October 2023, MTN received a binding offer from Telecel to purchase both subsidiaries for a nominal amount of $1 each, reflecting the challenging financial circumstances of these operations.
Financial Troubles in Guinea-Bissau
MTN Guinea-Bissau had been struggling financially, particularly after breaching a loan agreement totaling R171 million ($9.3 million) with an undisclosed lender. The situation worsened, leading to the company’s insolvency in December 2023 when its liabilities, amounting to R802 million ($43.6 million), far exceeded its assets, which were valued at R619 million ($33.7 million).
Given these financial challenges, MTN’s decision to offload the subsidiary was seen as a necessary step to stabilize its overall portfolio. The sale to Telecel was formalized with a sale and purchase agreement on December 15, 2023, pending regulatory approval, which has now been obtained.
Future Focus
With the divestiture of its Guinea-Bissau operation, MTN is sharpening its focus on more profitable West African markets, such as Ghana, Cameroon, and Côte d’Ivoire. These markets together accounted for 19% of MTN’s total revenue in 2023. The group aims to consolidate its leadership position in these key markets while exploring growth opportunities in high-potential regions.
In a statement to shareholders, MTN emphasized its commitment to ensuring a smooth transition of ownership in Guinea-Bissau. The group believes that this sale is in the best interests of the local subsidiary, its stakeholders, and the broader telecommunications sector in Guinea-Bissau.
Conclusion
MTN’s sale of its Guinea-Bissau subsidiary to Telecel represents a strategic withdrawal from smaller markets that have proven less financially viable. As MTN pivots towards larger, more profitable markets in West Africa, the move reflects a focused effort to optimize its operations and drive growth in regions that contribute more significantly to its bottom line. The sale underscores the importance of adaptability and strategic focus in navigating the complexities of the African telecommunications landscape.