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UPDATE 2-MTN won't bid for Ethiopian licence, to abandon Syria immediately

* Not rebidding based on return risks

* Operating in Syria has become “intolerable”- CEO

* Syria exit through abandonment

* H1 HEPS fall 10% (Recasts with Ethiopia licence and Syria exit)

JOHANNESBURG, Aug 12 (Reuters) - South African telecoms operator MTN Group will not resubmit a bid for a licence in Ethiopia and will also exit Syria immediately as it has become “intolerable” to operate there, group CEO Ralph Mupita said on Thursday.

Earlier this month, two senior government officials said Ethiopia will reopen bidding for its second telecoms operator licence in August, including the right to operate mobile financial services.

But mobile financial services was not enough to entice Mupita and his board, who had previously said the largest African operator would only bid again in the second round if mobile money, a key to its strategy, was included after losing the first round.

Mupita told reporters it would be difficult for MTN to enter the Horn-of-Africa nation of 118 million people as a number three challenger, which “always battles to make the returns work. So it’s a return based decision.”

He added that repatriating cash out of the country would be challenging.

MTN, which reported a 10% decline in reported headline earnings per share in the six months ended June 30 is also immediately exiting war-torn Syria, abandoning the operation after 15 years.

MTN had lined up Syria along with its Middle East operations for sale as part of its plans to exit that region in the medium term. But regulatory actions and licence payment demands had made it “intorable” to operate in Syria.

TeleInvest, the minority shareholder had been lined up to buy MTN Group’s 75% stake in MTN Syria for $65 million but the shareholder was failing to meet some of MTN’s compliance processes, Mupita said.

MTN Syria was placed under legal guardianship by a court in Damascus over alleged MTN violations of the terms of its licensing contract, which the state said deprived the government of revenue. MTN has denied the allegations.

The Syrian government was seeking 100 billion Syrian pounds ($40 million), Mupita said.

“Having considered the fact that we’ve lost control of the operations through what we feel was an unjust action on the legal guardianship and then further demands on back licence (payments) we decided we’re going to abandon the operation,” Mupita added.

“We reserve our rights to seek redress through international legal processes given the actions of the Syrian authorities that have left us with no other choice than to exit.” ($1 = 2,511.0000 Syrian pounds) (Reporting by Nqobile Dludla; Editing by Promit Mukherjee, Christopher Cushing and Lincoln Feast.)

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