MTN confirms possible West African asset sale

MTN Group is weighing up an offer from Axian Telecom for three of its operating units in West Africa, it confirmed on Thursday.

The South Africa-based telco group said it is “evaluating an orderly exit” of its MTN-branded businesses in Guinea-Bissau, Guinea-Conakry and Liberia in the medium-term, which suggests it is not in a hurry to offload the units. However, a bid has come in and naturally it’s taking a look.

It did not disclose the value of that bid, but given the size of the operations in question, it’s unlikely to be huge. Together the three opcos account for 6.1 million of the group’s 291 million-strong customer base as of the end of March, and contributed 0.7% to EBITDA, MTN said, in a statement accompanying the publication of its first quarter financial results on Thursday.

MTN posted 8.6% EBITDA growth in Q1 to reach 24.3 billion rand (US$1.3 billion) on revenues of ZAR52.8 billion ($2.8 billion), up 15.6% year-on-year, on a reported basis.

Group chief executive Ralph Mupita talked up his company’s performance, despite “difficult macroeconomic, geopolitical and regulatory conditions” during the quarter, highlighting issues like inflation, interest rates, and power outages in South Africa, amongst other things.

“Against this challenging backdrop we continued to implement proactive measures to sustain top-line growth and mitigate against inflationary pressures,” Mupita said. “In support of these interventions, we invested ZAR6.4 billion in our networks and platforms in Q1.”

That’s just a taste of MTN’s current position as it continues to reshape its portfolio. It gave the usual comment about discussions with Axian Telecom being at an early stage and hinted that the process will take time, so we shouldn’t expect an announcement any time soon.

We could have guessed as much. MTN’s reshaping process has been going on for some time and nothing has happened quickly. Indeed, in its Q1 report, the telco noted that the sale of its Afghanistan business – agreed via a US$35 million deal with M1 towards the end of last year – is still ticking over. Or in MTN’s own words: “The process to exit Afghanistan in an orderly fashion through the sale of MTN’s entire shareholding to a wholly-owned subsidiary of M1 remains on track, with regulatory engagements well progressed.”

It previously said it expects the Afghanistan deal to close in the second half of this year, a move that would mark its exit from the Middle East… a medium-term plan it first outlined back in 2020, that hasn’t been entirely plain sailing.

That’s not to say that in three years’ time we will still be waiting for MTN to finalise its exit from the three West African markets it is discussing with Axian Telecom. Not necessarily. But there probably won’t be a quick resolution here.

For its part, Axian Telecom is building up its African footprint, also in a fairly steady way. The company has its roots in the Indian Ocean, but began its foray into Africa in 2018 when it acquired Millicom’s Tigo operation in Senegal, later adding Togo and Tanzania to its footprint.

Axian must believe there is value to be had in MTN’s Guinea-Bissau, Guinea-Conakry and Liberia operations. The two parties just need to reach agreement on what they are actually worth.

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