MTN in US$5.5bn raid on Investcom

MTN Group, the largest mobile operator in Africa, has struck a US$5.5billion deal to buy Dubai-based Investcom as it seeks to expand its footprint in the Middle East.

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By  Chris Whyatt Published  May 7, 2006

MTN Group, the largest mobile operator in Africa, has struck a US$5.5billion deal to buy Dubai-based Investcom as it seeks to expand its footprint in the Middle East. The two companies announced the deal last week, with MTN Group offering to buy all Investcom shares in a cash deal. Fulfilling its ‘shared vision’ with Investcom, MTN will now become the second-largest emerging markets mobile telecoms player running networks with 28.1 million subscribers across 21 countries. Though it still trails Egypt’s Orascom, it lifts the enlarged company into direct competition with Kuwait’s MTC Group, which bought African operator Celtel in a US$3.4billion deal in March 2005. “We haven’t been in talks for very long, it’s probably a matter of weeks rather than months,” Azmi Mikati, Investcom’s CEO, told IT Weekly on the day the deal was announced. “If you look at the footprint they are very complementary and there is no overlap whatsoever,” he continued. “The strategic rationale ma- kes total sense. Both our companies have the same focus on emerging markets that operate in countries that are under-penetrated and growing very rapidly,” he went on to add. Africa and the Middle East are fast becoming the focal points for mobile operators and MTN is not shy in stating its ambition to become the world’s leading cell phone operator in developing markets. It made its first foray into the Middle East last year, buying a stake in a licence to run the second mobile network in Iran. The enlarged group said it will now have increased scale and capabilities, enhance long-term value for shareholders, customers and employees, and create significant potential to grow market share. Investcom executives had previously said the company was committed to remaining an independent mobile operator. Analyst firm IDC last week questioned the wisdom of the deal, at least in terms of MTN achieving its goals in the Middle East. “We do not see Investcom as particularly strong or well positioned in the Middle East,” Mohsen Malaki, senior programme manager, IDC CEMA, told IT Weekly. However, he added: “The acquisition could be beneficial for MTN’s position in the African market, due to the five countries covered by Investcom in Africa.” Investcom’s Mikati said the creation of the enlarged group gives MTN a better chance of acquiring Middle East GSM licences, such as those being contested for in Saudi Arabia and Egypt. IDC again disagreed. “We do not believe Investcom would make MTN any stronger contender for the Middle East licenses, other than the fact it can boast a wider geographical coverage in Africa,” said Malaki.

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