Yaoundé - 02 October 2023 -

Frozen accounts forced MTN to borrow funds for continuity of operations in H1’2023

Frozen accounts forced MTN to borrow funds for continuity of operations in H1’2023
  • Comments   -   Thursday, 17 August 2023 04:39

(Business in Cameroon) - MTN Cameroon borrowed CFAF91.5 billion (at the current South African Rand value) in the first half of 2023, according to data collected by Business in Cameroon. The funds, which represented almost 98% of the company’s operating expenses during the period, were raised in the form of syndicated loans from undisclosed banks.

In 2022, it took no new loan and even settled almost CFAF18 billion of debt. What's more, as of January 1, 2023, its net cash position was positive, at CFAF29.15 billion.  However, at the end of June this year, its cash position showed a net debt of CFAF13 billion.

One plausible hypothesis to explain this situation is the impact of its accounts being frozen following the legal action initiated by Cameroonian business mogul Baba Danpullo to dispute what he considers the illegitimate expropriation of his assets in South Africa. According to internal MTN sources, the telecom operator had to indebt itself to ensure the continuation of its operations.


MTN Cameroon's solid performance –with a CFAF156 billion turnover, a 36% operating margin, and 51.4% market share– as of the end of the first half of 2023 strengthens its credibility with Cameroonian banks. However, this confidence could be challenged.

Financial data for the first half of 2023 show that its interest-bearing liabilities (CFAF95.8 billion) exceed its liquidity (CFAF83 billion). What's more, some of this cash has been seized by the courts, making it impossible to use it for day-to-day operations. It is also uncertain if the telecom operator’s holding company (based in South Africa) will easily intervene in the event of challenges since its debt has also grown to 1.5 times its equity.

If the Cameroonian courts do not quickly rule on the case, MTN Cameroon could have to face short-term liquidity issues. Developments in the telecommunications sector will also be decisive for the operator. A slowdown in activity could exacerbate its difficulties in meeting its financial commitments. This should be of concern to creditors and suppliers because, in an unfavorable economic climate, they may have to wait longer for payment.

Idriss Linge

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