Nigerian daily This Day reports that South African cellco Vodacom has made an offer of USD480 million to the shareholders of M-Tel in the hope that it can acquire a majority stake in the ailing cellco, a subsidiary of the equally unwell incumbent NITEL. Vodacom, which has long sought a telecoms holding in Nigeria, has said it will pay USD250 million upfront to the Federal Government, which holds 24% of NITEL, followed by two instalments of USD115 million each to Transcorp, which owns the rest, if the latter agrees to give up an 18% stake immediately and a further 9% within three years. However, industry sources have indicated that Transcorp’s effort to offload M-Tel is premature and will be a lot easier said than done. For a start, the cellco does not belong directly to Transcorp and the Federal Government, but is a wholly-owned subsidiary of NITEL, and therefore the proceeds from M-Tel’s sale will actually go into the coffers of NITEL, which may insist that M-Tel’s indebtedness to it is offset via a restructuring of capital. If this occurs, M-Tel would have to be revalued, and any would-be suitors would have to be satisfied that they were in fact paying for M-Tel, rather than just paying for a stake in NITEL and all its associated liabilities, which analysts say is not something any bidder would be eager to assume.
Regardless of any intricacies that may arise from the sale of M-Tel, Vodacom’s bid drew an immediate counter-bid from recent 3G licensee Alheri Engineering, which offered to pay for 51% of the M-Tel shares up front. Alheri has said it is prepared to invest over USD1 billion if it acquires the cellco.
Vodacom has made several failed attempts to enter into the Nigerian market, notably via bids for the firm which is now known as Celtel Nigeria, formerly Econet Wireless Nigeria Limited, which it managed for a brief period in 2003 before withdrawing, citing ‘corporate governance issues’. Two years later Vodacom made a second attempt to acquire Econet (by which time it was known as Vee Networks Nigeria), again resulting in an unceremonious departure over alleged bribes.