MTN Group, the South African telecom giant, is set to reduce its operations in West and Central Africa, exiting Guinea-Bissau, Guinea-Conakry, and Liberia. This strategic move will decrease the company's footprint in the region from 19 to five countries. The decision comes as MTN navigates through a challenging financial landscape marked by inflation and currency devaluation.
Under the leadership of CEO Ralph Mupita, MTN has faced significant economic headwinds. The company's second-quarter report for 2023 detailed a substantial foreign exchange (forex) loss of N131.4 billion ($173.8 million), leading to a 64% plunge in pre-tax profits to N44.6 billion ($59 million). This downturn also affected half-year profits, which fell to N200.3 billion ($265 million) from N268.6 billion ($356 million) compared to the same period in 2022.
Despite these setbacks, MTN reported revenue growth of over 23.3% year-over-year (YoY) to N590.6 billion ($782 million) and a gross profit increase of over 22.9% YoY to N393.5 billion ($521 million). Operating profits also rose by 24.3% YoY to N214.9 billion ($284 million). However, the company was hit with a finance cost surge of over 259% YoY to N182 billion ($241 million).
MTN's total debt saw a notable increase to N855 billion ($1.13 billion) from December 2022's N689.6 billion ($914 million), while net assets declined to N258.2 billion ($342 million) from N355.6 billion ($471 million), though working capital remained at N588.7 billion ($780 million).
The considerable forex losses have been attributed to the Central Bank of Nigeria’s recent changes in forex operations, which resulted in a significant 60% exchange rate movement to N756.24 per dollar by June 2023.
Despite MTN's extensive presence, the markets of Guinea-Bissau, Guinea-Conakry, and Liberia contribute only a minor fraction (1.6%) to the company's total revenue. The telecom titan's EBITDA margin also experienced a decrease of 1.7 percentage points to 33.1% at the end of 2022 due to pricing pressures, fintech subsidies, and broader macroeconomic difficulties.
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