Reuters and Asha Speckman
MTN MIGHT be on to a good thing sniffing around for a Myanmar operational licence, but it has a harder job convincing the markets and analysts that putting out tentacles for an acquisition of up to $8 billion (R71.3bn) in north Africa would work, given the headaches it has had from its assets in Iran, Syria, Afghanistan and both the Sudans.
Chief executive Sifiso Dabengwa told the Reuters Africa Investment Summit yesterday that he was looking for targets on the continent, the Middle East and south-east Asia and would be interested in acquiring a north African operator, to help diversify earnings.
“Growth through M&A (mergers and acquisitions) is still an important part of our strategy, anything between $4bn and $8bn is something that we could look at,” he said.
He said this as it emerged that MTN was through to the second stage of selections for a licence to operate in the populous Myanmar and is one of about 15 telecom providers that have put in bids out of an initial pack of 90 companies.
MTN has operations in 22 countries in Africa and the Middle East.
From the remaining 15 candidates, only four will be short-listed and eventually two will be awarded the licences.
Mai Barakat, the senior analyst for the Middle East and north Africa (Mena) region at Informa Telecoms & Media, said MTN was better off growing and consolidating its current assets.
“I think MTN, from a Mena standpoint, should focus on its current operations rather than looking to invest. A large number of MTN’s operations are in difficult markets (Iran, Syria, Afghanistan, Sudan) and while these markets prove to have challenging operating environments, they hold strong growth potential. The need for these markets to be invested in should be the stronger focus.”
However, Barakat said the sale of a majority stake in Maroc Telecom, Morocco’s leading telecoms operator, held an opportunity for MTN which is said to be among several bidders including KT Corporation, Etisalat and Qtel (Ooredoo).
She said by purchasing the stake from Vivendi South Africa, MTN would gain immediate market leadership and would not have to engage in price wars as a new entrant.
MTN’s experience of operating in difficult markets also distinguished it from other operators,” Barakat noted. “They already have a footprint in north Africa with Sudan, so they would have a better idea of how to develop Maroc Telecom’s operations,” she added.
Mvunonala Asset Managers portfolio manager Farai Mapfinya said MTN did not necessarily have to pursue acquisitions given its existing portfolio.
“Going out again would add more risk to a share which is being perceived by the market as risky,” Mapfinya said. But MTN’s management had responded favourably to shareholders’ desires for a higher cash dividend during the past financial year, he said.
Mapfinya said the Myanmar licence would be “positive given the profile of that market at the moment. I do not necessarily think that it would add risk to the portfolio but I am not sold on the acquisition story in other regions.”
MTN expected to repatriate R1.2bn of its funds tied up in Iran this year, Dabengwa said.
The company has been in talks with the Iranian central bank and US authorities on sending back its dividends without violating sanctions.
However, Dabengwa said MTN would exit its Iran operation if there was any clear indication the US government would impose sanctions on it.
MTN is facing a $4.2bn lawsuit in a US court over rival Turkcell’s allegation that it used corrupt practices to win the Iranian operating licence.
An external committee appointed by MTN found the allegations to be false. Dabengwa said MTN’s lawyers were confident the court would throw out the case because it did not fall under its jurisdiction.
MTN stock fell 0.46 percent to R163.39 yesterday.