MTN Group has decided to abandon its Syria operations immediately on the back of untenable operations, owing to regulatory actions and demands and is reserving its rights to seek redress through international legal processes.

During a media briefing on the financial results for the six months ended June 30, MTN Group president and CEO Ralph Mupita said that the actions of the Syrian authorities left the company with no other choice than to exit.

“Having considered the fact that we have lost control of the operation, through what we feel was an unjust action on the legal guardianship, and then further [facing] demands on the back licence, we decided that we are going to abandon the operation.

“We are also making a clear statement that we are reserving our rights to seek international legal processes to protect our own interests.”

Mupita said that it had become intolerable operating in Syria, given all the demands.

The group has been operating in Syria since 2006, and recently announced plans to exit the Middle East operations through the $65-million sale of its 75% stake to minority shareholder Tele Invest.

In February, MTN Syria was placed under judicial guardianship by the Administrative Court of Damascus after the Syrian Ministry of Telecommunications and the Syrian Telecommunications and Post Regulatory Authority filed a lawsuit seeking interim measures against MTN Syria over alleged violations of the terms of its licensing contract, which the State said deprived government of revenue. MTN denied the allegations, protesting that the claims had no basis and that MTN intended to appeal.

The court appointed MTN Syria minority shareholder Tele Invest’s chairperson to serve as the judicial guardian and take over responsibility for managing the day-to-day operations of MTN Syria.

Further, MTN faced a demand for back licence payments for 2015 to the value of 100-billion Syrian pounds, which MTN also argued had no basis, as the licensing process was concluded in 2015, with all fees due paid to the satisfaction of the authorities.

“Those are the factors that drove our decision,” he said, highlighting that MTN Syria represented less than 1% of MTN Group earnings before interest, taxes, depreciation and amortisation at the end of 2020 and accounted for about 0.4% of group service revenue.

MTN Group continues to explore its options to exit Yemen and Afghanistan in an orderly manner.

Meanwhile, MTN has decided not to pursue a licence in Ethiopia after losing out on a bid in May for a new telecommunications licence to Safaricom-led consortium Global Partnership for Ethiopia.

“Our bid took into account the licence conditions as well as related uncertainties. We had also adopted a partnership approach to ensure that funding and risk were diversified. While disappointing, we are comfortable that our approach was guided by disciplined strategic and capital allocation frameworks.”

The group’s decision not to participate in the new liberalisation processes under way in Ethiopia takes into account the strategic financial risk criteria and the fact that MTN would be entering as a third operator.

“We have a belief that it is very difficult for a number three operator to make the economics work,” Mupita commented, noting that it was a return-based decision.

MTN has always aimed for the number one or number two position in any market it enters. With Ethio Telecom already the incumbent and the Safaricom consortium working on getting operations up and running, it would have been the first time that MTN entered a market as challenger number three.

Mupita said that MTN already had “a lot in the portfolio to do” to create value over the next few years.