MTN Group plots USD8bn acquisition; Africa, MENA, SEA all targeted

12 Apr 2013

South Africa’s MTN Group has indicated that it is willing to spend up to ZAR71.12 billion (USD7.97 billion) on an acquisition and is looking for targets on the African continent, in the Middle East and in Southeast Asia. Speaking at the Reuters Africa Investment Summit, CEO Sifiso Dabengwa told the news agency: ‘Growth through mergers and acquisitions is still an important part of our strategy. Anything between ZAR35.56 billion and ZAR71.12 billion is something that we could look at’. While the chief executive publicly reasserted MTN’s commitment to securing one of two new operating licences in Myanmar – this week it was revealed that the company was one of 12 telcos and consortia to have been shortlisted for the concession – he did not divulge any other specific target markets.

With a war-chest of almost USD8 billion at its disposal, MTN will arguably be able to have its pick of telecoms operators in its desired markets. To put things in perspective, in June 2010 India’s Bharti Airtel paid USD10.7 billion for the African assets of Kuwait-based Zain Group, comprising 15 markets. Further, in April 2011 Vimpelcom paid USD6.5 billion for 100% of Wind Telecomunicazioni (Wind Italy) and 51.7% of Orascom Telecom Holding (OTH), which encompassed telecoms assets in seven disparate countries. In terms of potential targets for MTN, in October 2012 Vimpelcom revealed that it intended to sell several of its businesses in emerging markets across Africa and Asia, as part of a rationalisation of the group’s global business. The company’s three sub-Saharan African units (U-Com Burundi, Telecel-RCA and Telecel Zimbabwe) were said to be collectively valued at around USD60 million, and each company would likely prove desirable to MTN, which currently lacks a presence in all three markets. Meanwhile, in South East Asia, Vimpelcom is also keen to offload its Beeline units in both Cambodia and Laos after struggling to compete effectively with the locally-owned operators. Other pan-African telecoms groups known to be keen to offload their businesses include Lebanese-owned duo Comium Telecom and BinTel Ltd and Sudatel-backed Expresso Telecom, all of which are present in multiple countries on the continent. However, MTN is not believed to be in the running to acquire French group Vivendi’s 53% stake in Moroccan incumbent Maroc Telecom, which has been valued at around USD6 billion.

In other news, Dabengwa told Reuters that the company has entered into talks with the Iranian central bank and US authorities on sending back dividends generated by its MTN Irancell unit, without violating international sanctions. The CEO admitted that MTN would exit its Iran operation if there was any clear indication the US government would impose sanctions on the business. MTN is currently mired in a USD4.2 billion lawsuit in the US over Turkcell’s allegation that it used corrupt practices to win its Iranian operating licence.