MTN Group is plotting a gradual exit out of the Middle East due to the increasing complexity of the business environment. The exit will include the sale of its shares in Snapp, Iran’s topmost ride-hailing startup.
The decision to exit is being mulled not because doing business in Iran and Syria are not profitable for the group but because it is not able to move money from Syria as easily as it wants. This is in addition to the sanctions being imposed by US President Donald Trump on Iran.
The US sanctions on Iran restrains any organisation doing business with the country from doing business with the United States.
According to Ralph Mupita, MTN Chief Financial Officer, the group has $170 million trapped in Iran in the form of loans and dividend which have not been easily moveable.
Divesting away from the Middle Eastern countries will be done one after the other. The subsidiaries in Yemen, Afghanistan and Syria have been marked down for sale first. Afterwards, its 49% stake in mobile operator MTN Irancell will be sold at a later stage.
The company will also be divesting its 43% stake in Snapp. According to the ride-hailing startup, it has attained the milestone of 2 million rides a day after being in the business for only 3 years. Snapp has 1.5 million drivers and operates in 34 cities in Iran.
MTN is in advanced talks to sell its 75% stake in the MTN Syria business. TeleInvest already owns 25% of the Syrian business and if the talks go as MTN plans, will take possession of the remaining 75%.
According to Mupita, MTN will be focusing more on its business in Africa. Recall that the group recently announced new CEOs for its Benin and Cameroon subsidiaries. The appointments showed a key restructuring of MTN’s C-level human resource in a way that can give its business an edge over competitors in Africa.
MTN’s recent moves in Africa
MTN’s Nigerian subsidiary launched the eSim card for pilot testing for subscribers. With the innovation, subscribers will be able to switch between network providers easily. The telco’s focus on Africa is part of its push to enter new markets on the continent as it sheds off stakes in businesses that it considers as non-core to its own business.
MTN will be selling its $243 million stakes in Jumia despite the fact that Jumia just recorded a 142% surge in its share prices after it dipped in 2019. The telco is selling off its stakes to pay off debts.
In Uganda, the company just obtained the extension of its telecommunications license for the next 12 years at a cost of $100 million. The Ugandan subsidiary is billed to go public on the Ugandan Bourse in the next 24 months with 20% of its shares.
The company also made the commitment to invest about $300m (Shs1.1 trillion) over the next five years to enhance its coverage to over 90% landmass up from the current 70% in the country.
Ethiopia is one of the next countries on MTN’s radar, as it plans to bid for a license to enter the African country’s telco space.
Exiting the Middle East will free up MTN’s cash base there and allow it to spend more on business ventures and expansions critical to the core of its business in countries where it will not be in conflict with the US.
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