South Africa’s MTN to exit Middle East to focus on Africa

MTN is in advanced talks to sell the stake in MTN Syria to TeleInvest, which holds the other 25% of the business, Group President and Chief Executive Officer Rob Shuter told media on a conference call as the firm reported its half-year results.

Headline earnings per share (HEPS) more than doubled in the first half to 430 cents, beating analyst estimates of 271 cents. Service revenue rose 9.4% on strong demand for data and financial and digital services during the coronavirus lockdown.

Shuter said MTN had good positioning in its Middle East markets but was “a very small contributor in a very complex environment”.

“We felt we were best served in the medium term to rather focus our energies in our core African markets that are closer to home,” he said.

Among reasons for divesting from the region, he cited losing money on falling regional currencies, the Middle East’s volatile geopolitics, and problems with Western sanctions, though he did not mention Iran specifically.

MTN’s entry into the region has been marred by allegations, which it has denied, that it used bribes to win a 15 year operating licence in Iran and also that it aided militant groups in Afghanistan.

The company’s Middle East assets contributed less than 4% to group earnings before interest, taxes, depreciation, and amortization in the first half ended June 30.

U.S. sanctions have made it harder to repatriate cash from its Iran joint venture.

Shuter said the initial focus will be on leaving Syria, Afghanistan and Yemen, and that it planned to divest its 49% minority holding in Irancell over time.

Data revenue rose 32.7% in the first half, while digital increased 24.6% and fintech revenue climbed 18%.

MTN has filed with the New York stock exchange to prepare for a secondary sale of shares in African online retailer Jumia, in which it has a 18.9% stake, Shuter said.

The sale is part of the group’s 25 billion rand ($1.42 billion) divestment plan aimed at simplifying its portfolio over the next three to five years.

MTN is also in advanced talks to sell its 20% shareholding in Belgium’s Belgacom International Carrier Services SA.