MTN partnership search
MTN is not wavering from its strategy of growth by acquiring other operators or by being acquired itself, despite abandoning its second potential merger in three months.
“MTN will always look at what we call value-enhancing opportunities for shareholders and for the company, and that’s what we will continue to do,” spokesman Nozipho January Bardill said. “As part of our vision we want to be a leading provider of telecoms services in emerging markets.”
MTN shares lost almost R10 to touch a low of R120,50 yesterday after the cellular operator declared that a potential merger with India’s Reliance Telecommunications was off. It cited “certain legal and regulatory issues” as the reason it was unable to conclude a deal with India’s second-largest mobile player. Talks with Reliance had begun when a proposed tie-up with India’s largest operator, Bharti, fell through.
Although MTN executives have been hunkered down in serious negotiations since May, January-Bardill said they had not had their attention diverted from actually running the business.
“Our managers are strategic people and a lot of our people are very operational and they do what they need to do. We haven’t lost any focus,” she said.
That rules out the need to take a break before assessing any other potential mergers or acquisitions. MTN did not have a preference on whether it would rather make the acquisitive moves or be on the receiving end of potential bids, January-Bardill said.
“It’s both ways. MTN is being looked at as a successful operator by others and we are always looking at opportunities on our side. We don’t have a favourite strategy of those two at this stage.”
The fact that two failed deals have not dented MTN’s desire for acquisitive growth does not surprise Frost & Sullivan analyst Lindsey McDonald.
“MTN will continue to consider other possible suitors and earmark possible targets,” she said. “We believe MTN should continue its pursuit of emerging markets. The company has proven that it is truly an expert in this type of market.”
She believes Latin America will be MTN’s next big focus, as its markets are similar to those in Africa, the mobile market is seeing robust growth, and it has operators that could be good targets or partners for MTN. One possibility is a merger with America Movil, an aggressive acquisitor itself with networks in 17 countries from the US and throughout central and southern America.
It has 159-million subscribers, more than double MTN’s 68-million, plus 3,9-million fixed lines. It is listed on the New York and Nasdaq stock exchanges with a market capitalisation of $59bn, compared to MTN’s $31bn.
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