MTN Cameroon borrowed 91.5 billion FCFA in H1 2023 following accounts freezing

08 September 2023

According to data from ‘Investing in Cameroon,’ MTN Cameroon borrowed 91.5 billion FCFA during the first half of 2023. These funds were mobilized in the form of syndicated loans from the banking sector. This amount is equivalent to nearly 98% of the company’s operating expenses for this period.

However, the company closed the year 2022 without taking out new loans. It had ended that year by reimbursing nearly 18 billion FCFA of debt. In addition, it had a positive net cash of 29.15 billion FCFA as of 1 January 2023. However, at the end of last June, its cash showed a net debt of 13 billion FCFA.

This has been attributed to the impact on the company’s cash flow of the freezing of its accounts. This situation is the consequence of the legal action initiated by Cameroonian billionaire Baba Danpullo, in reaction to what he considers to be “illegitimate expropriation” of his property in South Africa by the local judicial authorities.

Banking institutions have chosen to support MTN Cameroon. Its solid performance, with a turnover of 156 billion FCFA in the first half of 2023, an operating margin of 36% and a dominant market share of 51.4%, reinforce its credibility with Cameroonian banks.

Financial data for the first half of 2023 shows that its liabilities with interest of 95.8 billion FCFA exceed its cash at 83 billion FCFA. In addition, part of this cash has been seized by the courts, making its use for daily operations impossible.

If the Cameroonian courts do not decide quickly on the merits of the case, MTN Cameroon could find itself in a situation of short-term liquidity deficit. Developments in the telecommunications sector will also be decisive for the operator. A slowdown in activity could accentuate its difficulties in honouring its financial commitments.