Kuwait’s MTC set for Celtel legal battle

MTC’s deal to buy African mobile operator Celtel is in doubt after South African service provider, MTN, went to the British courts last week to challenge the bid.

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By  Rhys Jones Published  April 24, 2005

MTC’s deal to buy African mobile operator Celtel is in doubt after South African service provider, MTN, went to the British courts last week to challenge the bid. MTN, Africa’s biggest mobile operator, claims it made a legally binding deal to buy third-ranked Celtel before being trumped by Kuwait’s MTC, and hopes to prove it in court, the company said last week. MTN offered US$2.7 billion for Celtel before being beaten by MTC’s offer of a US$3.3 billion bid. MTN has applied to British courts to force disclosure of documents belonging to Celtel and its chairman Mohamed Ibrahim in a bid to prove its smaller rival illegally snubbed it when a better offer came along. Celtel, which operates in 13 sub-Saharan countries, declined to comment on the allegations, but said it was confident the MTC deal would be wound up this month. “Celtel received several approaches and ultimately the board recommended the offer by MTC,” said Martin de Koning, head of corporate communications, Celtel. “We are confident (the deal) will be closed within the month,” he added. MTN said it offered just under US$2.7 billion for Celtel, of which US$100 million would be paid a year after the deal. An extra US$150 million would be paid if certain legal and other issues were resolved, it added. The company said shareholders holding a substantial percentage of Celtel’s capital had made “legally binding undertakings” in favour of MTN’s offer before MTC’s US$3.3 billion bid was announced at the end of March. “Upon determination of MTN’s application which is currently being heard, MTN will review its position and determine what further action is necessary or advisable in order to protect its rights,” MTN said in a statement. Analysts said that, while MTN may face a hard battle for Celtel, the revived chances of a deal had cheered investors keen for the cash-rich company to expand closer to home. “I think MTN are serious about this,” said Meloy Horn, telecoms analyst at Merrill Lynch. “They may now have a chance of getting hold of Celtel and they make a nice strategic fit.” Celtel, Africa’s third-biggest mobile phone service provider, had been planning to float in London this year with a possible secondary listing in Johannesburg. It has 5.2 million customers across Africa. It is widely regarded that MTC, headed up by Saad Al Barrak, paid over the odds for Celtel. But interest in the operator reflects growing appetite for telecoms in Africa, the world’s last untapped market for mobile phone services.

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