MTN Group counted itself out of a second attempt at securing a licence in Ethiopia and confirmed it was walking away from its troubled Syria unit, as it booked an expected hefty drop in net profit for H1.
In its financial results statement, the operator declared it would not participate in Ethiopia’s latest tender to find a second new entrant, having had its initial bid rejected in May.
Following its initial failure to secure a licence, MTN CEO Ralph Mupita (pictured) indicated it would consider another attempt if licence terms were changed to include mobile money.
However, despite Ethiopian authorities changing their stance on this key sticking point, MTN has now given up on its ambition to enter the market.
Bloomberg reported the operator was concerned about the political situation in the country.
Elsewhere, the company announced it had started the process of exiting Syria by “abandoning the operation, given regulatory actions and demands that make operating in the market untenable”.
In March, its unit in the country was placed under the control of authorities following alleged licence violations, which MTN denies.
Mupita added, “We reserve our rights to seek redress through international legal processes given the actions of the Syrian authorities that have left us with no other choice than to exit.”
As part of a wider plan to quit markets in the Middle East to focus on its core markets in Africa, the executive said it was in the process of exploring its options to exit Yemen and Afghanistan “in an orderly manner”.
MTN booked a number of impairment charges and other one-off items which hit its bottom line in H1.
These included a ZAR4.7 billion ($320.2 million) hit on its Syria exit, an impairment charge of ZAR700 million in Yemen and donations related to the pandemic of ZAR500 million. The charges were partly offset by the sale of its stake in international wholesaler BICS.
The company, though, pointed to solid operational growth in H1 against the backdrop of what it described as “persistently challenging trading conditions”.
Service revenue increased 19.7 per cent year-on-year on an adjusted basis to exclude currency fluctuations, it noted, pointing to good performances in South Africa, Nigeria and Ghana. It also benefitted from continued growth in data usage and mobile money in several of its key markets.
Net profit of ZAR4.2 billion was down from ZAR13.3 billion in H1 2020, though the latter included tower asset sales. Revenue was up from ZAR84.1 billion to ZAR86.7 billion.