MTN will pull out of business in the Middle East, according to an announcement in the company’s interim results for H1 2020.
“As part of the review of our portfolio, we believe the group is best served to focus on its pan African strategy and to simplify its portfolio by exiting the Middle East region in an orderly manner over the medium term,” MTN said.
Of its total group earnings before interest, taxes, depreciation, and amortization (EBITDA), MTN’s Middle East assets contributed less than 4%.
The operator will begin the process with the sale of its 75% stake in MTN Syria to minority shareholder Televest, which holds the remaining 25% stake in MTN Syria.
MTN Syria contributed 0.7% to the company’s reported EBITDA in H1 2020.
The company explained how the sale would affect its financials going forward.
“The net assets attributable to MTN Syria in the MTN Group accounts have been written down to the estimated recoverable amount of R1.4 billion (US$80 million),” MTN said.
“The foreign currency translation loss of R4.8 billion as at 30 June 2020, that has accumulated over time, will be released to the income statement on conclusion of the transaction.”
“This will negatively impact EPS, but will have no material impact on HEPS, cash flow and the balance sheet,” the operator said.
MTN reported an overall increase of 9.4% in service revenue across the group’s global operations, although revenue in South Africa dropped by 5.7%.
News of the Middle East exit comes after a lawsuit was filed in the US in April 2020 that claimed MTN and several other Western businesses aided terrorist organisations in activities carried out against the United States in the region.
Filed on behalf of American service members, civilians, and their families, who were killed or wounded in Afghanistan, the complaint alleged that MTN paid over $100 million to al-Qaeda and the Taliban so its towers would not be destroyed.
The lawsuit also claimed that MTN would switch off these towers at night, and in doing so, hampered US intelligence operations.
MTN previously filed a motion to dismiss the original lawsuit, because it said the court lacks jurisdiction over MTN, which does not operate in the United States, and because the complaint does not allege any conduct by MTN that would have violated the Anti-Terrorism Act.
Following an amendment of the complaint by the plaintiffs in June 2020, the operator now anticipates filing another motion to dismiss on largely the same grounds.
“MTN remains of the view that it conducts its business in a responsible and compliant manner in all its territories and will defend its position where necessary,” the operator said.