MTN has written off and abandoned its business in Syria after clashes with the government complicated its efforts to offload the subsidiary, highlighting the complexity of profitably exiting unstable, war-torn countries.
MTN began operating in Syria in 2006, which contributed only 0.4% to group revenue of more than R80bn.
MTN is also exiting Afghanistan, Yemen and Iran as part of a five-year plan unveiled in 2019 to reduce risk, sell non-core assets such as towers and masts, and raise about R25bn.
Disputes in Syria have resulted in MTN abandoning its business.
‘It’s become intolerable to operate in Syria’, according to group CEO Ralph Mupita.
In February, the Syrian operation was placed under curatorship as authorities in Syria accused the MTN subsidiary of mismanagement and violation of its operating licence conditions.
This effectively took operational control of the business away from MTN.
‘The actions of the authorities were, with respect, unfounded and unnecessary and … violated our own rights as a company. On that basis, we’ve decided to abandon the operation, reserving our right to seek legal recourse.’
Mupita says ‘There’s no similar situation in the other two markets but we’re going to continue to monitor those. We would prefer orderly exits. We can’t predict what will happen in the future, but that’s what we are aiming for.’
The decision seems to make sense for investors as well.
‘MTN hasn’t been able to repatriate dividends from Syria for some time,’ said David Lerche, head of equities at Sanlam Private Wealth.
Lerche expects orderly exits from Yemen and Afghanistan although the prices that MTN receives may not be great. ‘The market places little value on these markets anyway’.
As at the end of June 2021, MTN had 277-million subscribers spread across 21 markets in Africa, which it considers a growth engine.
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