10 September 2021
MTN Group has pulled the plug on its attempt to secure an operating licence in Ethiopia as it recorded a major drop in net profit for the first half of the year (H1).
The South Africa-based operator declared it would not participate in the Horn of Africa nation’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 chief executive officer Ralph Mupita indicated the company would consider another attempt if licence terms were tweaked to include mobile money.
However, despite Ethiopian authorities changing their mind on this point, MTN has now decided to turn its back on any deal. According to reports, the operator is concerned about the political situation in the country. MTN said it is also exiting Syria by “abandoning the operation, given regulatory actions and demands that make operating in the market untenable”.
Furthermore, as a part of a wider strategy to exit markets in the Middle East, the firm said it was in the process of exploring its options to exit Yemen and Afghanistan “in an orderly manner”.
MTN recorded a number of impairment charges and other one-off items, which hit its bottom line in H1.
These included a R4.7bn loss on its Syria exit, an impairment charge of R700m in Yemen and donations related to the pandemic (R500m).
However, the company highlighted solid operational growth in the period against the backdrop of what it described as “persistently challenging trading conditions”.
Service revenue increased 19.7% year-on-year on an adjusted basis to exclude currency fluctuations, pointing to rude health in South Africa, Nigeria and Ghana. It also benefitted from continued growth in data usage and mobile money in other key markets, the operator said.