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Uncertainty over MTN's Visafone acquisition

By , ITWeb
Nigeria , 04 Oct 2016

Uncertainty over MTN's Visafone acquisition

There is some uncertainty in the market over MTN's acquisition of Nigerian ICT provider Visafone Communications.

Bloomberg reports the MTN group is considering abandoning the acquisition after Nigeria's industry regulator ruled that broadband spectrum should not be included in the deal.

However, MTN's integrated report for the year ended 31 December 2015 says the telecoms operator had already concluded the deal.

"On 31 December 2015, the group acquired 100% of the share capital of Visafone Communications Limited, an ICT company, for a cash consideration of R3.4 million. As a result, the group obtained control of Visafone Communications Limited," the report reads.

"The acquisition will enable the group to improve the quality of broadband services for its subscribers. The acquisition seeks to leverage resources for service enhancement and reflects the group's concerted efforts to deepen the growth and roll-out of broadband services across Nigeria."

According to Bloomberg, the Nigerian Communications Commission (NCC) ruled last week that taking control of Visafone's spectrum would increase MTN's dominance in Nigeria.

MTN spokesperson Chris Maroleng declined to comment when contacted by ITWeb.

Visafone is one of the leading CDMA (code division multiple access) and ICT companies in Nigeria, offering a number of services, including voice, 3G data services and Internet services. Visafone also provides business solutions to small and medium companies and corporate organisations in Nigeria.

In February, MTN confirmed that rival telecoms operator Etisalat had filed a lawsuit against it and Visafone over the acquisition. The crux of the dispute seemed to be MTN's access to 800MHz spectrum obtained through the acquisition.

At the time, MTN executive Amina Oyagbola said the acquisition of Visafone was concluded "after obtaining all necessary statutory and regulatory approvals" but could not comment further. Maroleng could also not give any details about the court case.

In June, MTN announced it has been declared the winner of an NCC auction for a 10-year frequency spectrum licence, for the 2.6GHz band. The telco said the spectrum licence will guarantee superior performance for wireless networks, especially 4G LTE services in the country.

"This licence acquisition further demonstrates MTN's abiding faith in the future of Nigeria and the resilience of the Nigerian economy. MTN continues to believe in Nigeria and we have expressed this belief in the level of our investment, which currently stands at approximately $15 billion and counting," according to MTN Nigeria CEO Ferdi Moolman.

He said MTN Nigeria complied with all the requirements of the auction and made a licence payment of N18.96 billion (R1 billion at the time) to the NCC, emerging as the sole approved bidder for the spectrum.

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