MTN bids double value
As yet another suitor joins the ranks of bidders for MTN, black economic empowerment (BEE) investors who bought into Africa's largest cellular network operator at a 20 percent discount last August have almost doubled their money.
MTN's share price has risen 19.4 percent since rumours of a looming bidding war for the group started last month. Since the National Empowerment Fund's Asonge deal was announced, it had already been rising steadily on the back of strong operational performance and the successful swallowing of Investcom, which had operations in 11 Middle Eastern and African countries.
The investors have already made R928 million profit on their initial R931 million investment.
Yesterday the stock rose 3.72 percent to R159, taking its market cap to R288 billion.
The Asonge deal saw 85 000 black individuals and groups buy 11.7 million shares in MTN at R79.61 each, a 20 percent discount to the R99.51 close on July 20, when the transaction was announced. The shares represent 0.75 percent of MTN.
Yesterday Emirates Telecommunications (Etisalat) emerged as the latest firm to show interest in MTN, hot on the heels of last week's news that India's Bharti Airtel had held "exploratory" talks.
Etisalat chairman Mohammed Omran said his firm sought to boost revenue from Africa to at least a quarter of total revenue within four years. "We are always looking for expansion in Africa," he said. "We are evaluating MTN, among others."
Dobek Pater, a telecoms analyst at Africa Analysis, said Etisalat's entry reinforced the view that MTN was an attractive company that offered great geographic reach and organic growth prospects.
State-owned Etisalat, which operates in 16 countries and has 51 million customers, has been on a four-year, $5 billion (R38 billion) spending spree, setting up cellular operators in Egypt and Saudi Arabia and buying a stake in a Pakistani unit. It is a shareholder in a new operator in Nigeria, where MTN already operates.
Chief executive Phuthuma Nhleko has driven MTN's massive growth over the past seven years. Today it has 68.2 million subscribers in 21 countries in Africa and the Middle East. This growth has made MTN a takeover target for companies seeking to expand in Africa.
China Mobile may enter the bidding war. Last week it said it had not made a bid for MTN but was interested in entering the South African market. Vodafone has since said it would not bid for MTN as it was still interested in increasing its stake in Vodacom, MTN's rival and the country's biggest operator.
Analysts say Etisalat and China Mobile are strong contenders, with more financial muscle than Bharti. But Bharti, which has 62 million subscribers in India, is reported to be increasing its offer to R175 a share.
The takeover talks pushed the rand to gain 1.3 percent against the dollar yesterday.
MTN is one of the most successful black-managed firms. Some analysts question whether the state would allow one of the jewels of corporate South Africa to fall into foreign hands.
"The government probably has to be consulted on any change in ownership that may occur," said Rajay Ambekar of Cadiz African Harvest.
Although there was no legal ground for the government to prevent anyone buying MTN, Ambekar said it did have some say as the Public Investment Corporation held 13.09 percent.
Business Report
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