MTN's Guinea-Bissau, Guinea-Conakry exits explained

MTN is moving forward with plans to exit certain West African markets that are deemed too risky or not able to fund their own growth.

MTN Group President and CEO Ralph Mupita explained the group's disposal strategy for its operations in Guinea-Bissau and Guinea-Conakry during an MTN Editors Roundtable held in Johannesburg last week.

"Given our risk management framework and the things we need, some markets are very difficult. We're not the best owners of those businesses because they're subscale or they're small, and they are not going to be able to fund their own growth," Mupita told Connecting Africa.

"The moment a business sustainably cannot fund its own growth for whatever reason, we have to assess portfolio fit yes or no. These are difficult decisions to make, because these are your colleagues, but they have to be made all the same," he added.

"So, Guinea-Conakry and Guinea-Bissau, we looked at them and said, even if they triple their revenue or their profits, are we the best owners of these businesses? And the answer was no, so we said let's engage with third parties," the CEO continued.

Pan-African operator Telecel Group showed interest in both Guinea-Bissau and Guinea-Conakry. MTN confirmed as part of its half-year results published last week that Guinea-Bissau has now been sold to Telecel Group.

At MTN's full year results announcement in March 2024, the group confirmed it had signed a sale and purchase agreement with Telecel for a consideration of US$1 for each of the operations.

Both the Guinea businesses are in net liability positions and Telecel will pick up those net liabilities as they take over.

Guinea-Conakry has provided some headaches for MTN and in January 2024, MTN's offices in Almamyah and Coleah were sealed by the local post and telecommunications regulator over a licensing payment issue.

There is no set timeline for the official sale of Guinea-Conakry as of yet, but it's expected in the near future.

Telecel has been growing its portfolio and acquired a 70% stake in Vodafone Ghana in February 2023.

Ralph Mupita, MTN Group president and CEO. (Source: MTN Group).

Originally Liberia was also on MTN's chopping block, after a May 2023 offer from Axian Telecom, but Mupita told Connecting Africa that for now "Liberia funds on growth" and is a dollarized market that is not asking the group for additional capex.

"You know, in this environment, if you don't have scale, it's difficult to weather the headwinds that come on the continent. So, we've looked at those two markets, Conakry and Bissau, and we'll continue to monitor the portfolio. Let me not say other markets may not come back on [for sale]," he added.

MTN's West African portfolio

MTN's West and Central Africa (WECA) operations include its biggest market of Nigeria as well as Ghana, Cameroon, Côte d'Ivoire, Benin, Congo-Brazzaville, Liberia, Guinea-Conakry and Guinea-Bissau.

Data provided by MTN as part of its half-year results shows that Guinea-Bissau only had around 894,000 subscribers at the end of June 2024, whereas Guinea-Conakry had almost 2.9 million and Liberia had just over 2.1 million users.

When compared to a market like Ghana with 28.4 million users or Nigeria with over 79 million subscribers, it's clear to see where the scale issue lies.

Nigeria is by far MTN's biggest market by subscribers – with more subscribers than all the other WECA operations combined.

Guinea-Bissau's average revenue per user (ARPU) was US$1.94 per month in the second quarter of the year and Guinea-Conakry's ARPU was around $1.59. In comparison ARPU in Congo-Brazzaville was $5.29; Benin's ARPU was $4.71, and Cameroon's was sitting at $4.04 per month.

When asked about the growth potential of MTN's other West African markets, Mupita highlighted Ghana and Cameroon as strong markets but said he hoped to see better performance in Côte d'Ivoire.

"There are some regulatory issues in Côte d'Ivoire around CVM [customer value management], [which is] a particular way of presenting offers to customers, and regulation doesn't allow that. There's a third operator who has come in on the fintech side, a company called Wave. They have a big base in Senegal, and they are kind of pushing pricing down to the floor, and we are telling our guys don't follow, because it's a road to zero there," he explained.

MTN Côte d'Ivoire's service revenue was also negatively impacted by the largescale undersea cable disruptions in the first few months of 2024, which negatively affected voice and data subscriber growth, alongside the price wars in the market.

Nigeria used to be MTN's biggest revenue generator, but the sharp devaluation of the Nigerian naira over the past year saw MTN Nigeria's service revenue drop by 52.9% year-over-year for the six months ended June 30, 2024.

Nigeria's troubles pulled down the group's half-year service revenue by 20.8% to R85.3 billion ($48 billion) and the group reported a loss before tax of R9 billion (US$508 million) for the six months, compared with a restated profit before tax of R8.3 billion ($464 million) a year earlier.

— Paula Gilbert, Editor, Connecting Africa