MTN Group bolsters borrowing capabilities, fuelling speculation of possible acquisition

South Africa-based MTN Group has reportedly substantially increased its borrowing facilities sparking analyst speculation that it has its sights on an acquisition target. The carrier, which focuses its activities on Africa and the Middle East, had total debt of ZAR46 billion (USD4.27 billion) at end-December 2013, up 40% year-on-year, although that only increased its gearing to 3% – according to analysts. Industry watchers note that the Group’s move to increase its borrowing potential mirrors a similar increase in 2008 when it was in talks over the purchase of a stake in an Indian telecoms operator. Further, it is evident that MTN is one of the most ‘undergeared’ of the world’s major telecoms providers, when compared to rivals with a similar market valuation. Despite the increased speculation, MTN declined to confirm or deny whether it is targeting a major acquisition. However, TeleGeography’s GlobalComms Database reports that its CEO Sifiso Dabengwa is on record as saying that MTN plans to spend USD8 billion on expansion, and is looking at the Middle East and Southeast Asia, in particular. Indeed, in August this year the board of MTN Group reportedly approved USD1 billion for its entry into India, with the South Africa-based operator now said to be involved in talks with three Indian operators; Tata TeleServices is seen as the most likely candidate for a potential takeover, given Tata Group’s eagerness to offload its loss-making Indian telecoms arm, although talks have also been held with Videocon and Aircel.