MTN Cameroon - Afrikan Heroes

How MTN Cameroon Borrowed $152 Million to Stay Afloat in the First Half of 2023

August 21, 2023

Ralph Mupita, the MTN Group President and Chief Executive

MTN Cameroon, a mobile phone company, faced challenges with its financial records and sought external help. It secured a loan of roughly $151.9 million (equivalent to about 91.5 billion FCFA) from undisclosed banks to ensure its operations from January to June 2023. This significant amount represented nearly 98% of the company’s operating expenses during that period.

Interestingly, MTN Cameroon refrained from borrowing in 2022. It managed to repay around $29.9 million (18 billion FCFA) of its debt that year. Moreover, the company began January 1, 2023, with a net positive cash balance of about $48.3 million (29.15 billion FCFA). However, by the end of June, its cash position had shifted to a negative one, with a debt of approximately $21.6 million (13 billion FCFA).

A plausible explanation for this situation stems from the freezing of the company’s funds due to a legal dispute. For over two years, the properties of a prominent Cameroonian billionaire named Baba Danpulloin were seized and sold by his bank in South Africa. The First National Bank (FNB) explains that its client has been unable to repay his debts since 2019. This is refuted by Baba Danpullo, who speaks of “expropriation” and a “racist crusade” against his group, Bestinver. In response, he obtained a Cameroonian judge’s order to freeze the bank accounts of MTN, Broadband Telecom by Collins Mukete, Mobile Money Corporation, and Chococam, in order to recover what he sees as “maliciously diverted sums” by his banker. On the other hand, MTN accuses Baba Danpullo of “attempted extortion of funds.” An investigation into this battle where justice is the first victim.

Consequently, MTN, the mobile company, had to rely on borrowed funds to sustain its operations during the period of frozen assets.

MTN Cameroon’s impressive business performance continued, generating approximately $258.5 million (156 billion FCFA) in revenue in the first half of 2023. With a healthy operating margin of 36% and a dominant market share of 51.4%, the company continued to gain credibility with Cameroonian banks. Nonetheless, uncertainties arose.

Financial data for the first half of 2023 revealed that its interest-bearing liabilities exceeded its available liquidity. Furthermore, a portion of its cash was seized by legal authorities, rendering it unusable for daily operations. Additionally, the parent company based in South Africa might face challenges in readily intervening. Furthermore, MTN Cameroon’s debt level increased to 1.5 times its equity.

Should the Cameroonian legal system fail to promptly resolve the underlying issue, MTN Cameroon could potentially face a short-term liquidity shortfall. The trajectory of the telecommunications sector would also impact the company. Any slowdown in the sector’s activity could worsen the company’s difficulties in meeting its financial obligations. This situation would naturally raise concerns among creditors and providers of goods and services, as they might experience delays in receiving their payments amid an unfavorable economic backdrop.

Ghana Wants Armed Forces to Help Government’s Digitisation Agenda

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

MTN Joins Orange, Becomes A Tax Collector In Cameroon

April 13, 2021

“The declaration and payment of your taxes by electronic means (mobile phone) are now operational for MTN subscribers.”

This is the message that the Directorate General of Taxes (DGI) in Cameroon has been disseminating for several days. According to the tax administrator, the new tax collector will facilitate payment to taxpayers at the country’s divisional tax centers (CDIs).

Here Is What You Need To Know

MTN thus becomes the second telecom operator after the Cameroonian subsidiary of Orange.

With both Orange and MTN Cameroon coming on board, electronic tax payment service now reaches some 20 million subscribers in the central African country.

Other operators such as Camtel and Nexttel as also waiting to join.

Electronic tax collection is a provision of the country’s 2021 finance law.

The law now covers the issuance and notification of receipts electronically and consequently eliminated the issuance of manual receipts which are a source of “various fraud”.

However, according to the 2021 finance law, taxpayers can also carry out these tax transactions by bank transfer.

The country recently prohibited the payment of tax in cash. This is to avoid embezzlement of public funds. Indeed, tax officials in the past were not often hesitant to help themselves when in contact with cash.

In 2017, the country’s Minister of Finance had to sanction no less than 137 agents of his administration. The charges against these employees revolved essentially around the production of false receipts and the embezzlement of revenue.

These agents, usually deployed in public revenue collection stations, fabricated false documents attesting to the payment of collected revenue into state coffers, although these funds did not appear anywhere in the treasury books.

MTN and Orange will hope to eliminate most of these lapses.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

MTN tax Cameroon MTN tax Cameroon