MTN faces rocky situation in Syria, hampering Middle East exit

South African operator MTN is facing a rocky situation in Syria, as the company was placed under a judicial guardianship following a court battle that went in favor of the country’s telecoms regulator.

The Syrian Telecommunications and Post Regulatory Authority had previously accused the provider of mismanagement and violations of its licensing contract. According to Reuters, the state had claimed that the alleged violations deprived it of revenue, while MTN denied the allegations and said last week that it intended to appeal.

The regulator filed a lawsuit against the South African courier before the administrative court of Damascus seeking interim measures against MTN’s Syrian operations. The move cripples the company’s exit from the Syrian market, as it was reportedly hoping to settle a deal worth $65 million, amounting to 75 percent of MTN’s Syrian unit, Reuters reported.

It is worth mentioning that the administrative court of Damascus appointed MTN Syria minority shareholder Tele Invest as its guardian, which was primarily tapped to become the buyer of the Group’s 75 percent stake in its Syrian office.

The judicial guardian is responsible for managing its day-to-day operations.

The sale to TeleInvest is meant to be part of MTN Group’s plan to exit the Middle East, corresponding with its new strategy to focus on its core African markets in the medium-term future.

MTN Group highlighted in a statement late last week that it “strongly disagrees with the allegations made before the court” — which have yet to be made known — as well as the decision and intends to file an appeal. In addition, the group is also considering other appropriate steps to take in light of the ruling.

According to the provider, in the six months to June 2020, MTN Syria contributed 0.7 percent to the group’s reported earnings before interest, tax, depreciation and amortization. At that time, the net assets attributable to MTN Syria in the MTN Group accounts had been written down to the estimated recoverable amount of $80 million.

Reuters had also reported that MTN’s operations in the Middle East have been the center of wide controversy, with allegations over its use of bribes to win a 15-year operating license in Iran, while, in parallel, aiding militant groups in Afghanistan; MTN, however, denies all the allegations.