MTN is proving to be hotter than other telecoms, going by the huge number of fans lining up to be acknowledged. Vodafone, China Mobile, Telkom South Africa, Bharti Airtel, UAE’s Etisalat, Reliance Communications have all entered the fray to win over MTN.
The reason for this interest in the largest mobile services company based in South Africa, is because a stake will give these other companies’ easy entry into the African markets. MTN has 68 million customers in 21 different countries with most of its subscribers in South Africa, Iran and Nigeria.
Vodafone, the world’s largest mobile phone operator may possibly be looking at the possibility of bidding for MTN, which is South Africa’s third-largest mobile phone group. Arun Sarin, Chief Executive of Vodafone is said to have instructed his in-house acquisition team leader, Warren Finegold to examine the options to buy MTN.
The Sunday Telegraph said, “Vodafone is contemplating a bid for South Africa’s third-largest mobile phone group, a move that could cost it £19 billion, but would transform its presence in some of the world’s fastest growing telecom markets.”
Vodafone’s interest in MTN comes on the heels of the Indian Telecom company Bharti Airtel wanting to buy 51% stake in MTN, and the talk about the two companies being in discussions. However, MTN said that the offer from Bharti Airtel undervalues the company.
Vodafone had a setback last year when they failed to take control of Vodacom, which is Vodafone’s existing presence in South Africa. This deal would represent another route they take across the huge African continent.
Analysts say that the whole thing is still in the initial stages and the deal may not even come through. If Vodafone does go ahead and makes an offer to buy MTN’s international and domestic business, then it will pick up assets in more than 20 emerging markets. People who are familiar with Vodafone’s thinking feel that it may not go ahead with offering to buy MTN or it may only opt to buy the international business.
The latest suitor to join the line is Reliance Communications, which is India’s second-largest mobile telecoms operator. They announced that negotiations are underway with MTN regarding the possibility of combining both businesses.
Reliance stepped in after Bharti Airtel was forced to abandon the proposed buyout at the last moment, when MTN unexpectedly proposed to make Bharti MTN that they can enter as a subsidiary rather than the other way around.
UAE’s government owned Etisalat, which has a huge presence in sixteen countries with over fifty million customers, is currently on a $2bn spending spree and has set up mobile operators in Saudi Arabia, Egypt and Pakistan; with deals confirmed in Indonesia and Nigeria. It has made MTN its acquisition target, as it had its eyes on Africa for a long time now.
Even with all the talk about the acquisition of MTN and all these companies falling over each other to be the chosen one, there is still no indication as to what MTN Chief has in mind. MTN is managed by Cyril Ramaphose, who was a secretary-general in the African National Congress. He is said to be an astute negotiator and was even involved in ending apartheid, and is also a possible presidential candidate. He is said to be against MTN being folded into another company. He does not mind if the ownership changes, as long as the company exists.
MTN, being one of South Africa’s most successful black-managed companies, analysts wonder whether the government of South Africa, which is currently encouraging more black ownerships in the economy, will allow one of the best South African jewels to fall into foreign hands. Although the government cannot actually prevent anyone from buying MTN, it does have a say as the Public Investment Corporation holds 13.09% share of MTN.
While all the top mobile companies continue to hold talks with MTN, experts say that eventually MTN may decide not to give it up at all.
