MTN feathers its bed in the Middle East

Spurned in its bid to acquire Celtel, which has licences in 13 African countries, MTN has set its sights on the Middle East.

First prize would be a stake in the Irancell consortium, now potentially up for grabs after the Iranian government baulked at handing over 70% of the licence to Turkish operator Turkcell.

Reuters reports that MTN last week held discussions with Irancell shareholders, even after Turkcell had signed an agreement to acquire 49% of Irancell. Negotiations between Irancell and Turkcell broke down over accusations of foot dragging about the payment of licence fees. Iran is reportedly unwilling to hand control of key infrastructure to foreigners, and “accused Turkcell of links to Iran’s foe Israel,” according to Reuters.

Iran has a population of nearly 70-million, with a cellphone pene-tration of just 8%.
Irancell plans to challenge the incumbent operator TCI for dominance of what is regarded as the most promising market in the Middle East.

MTN has been frustrated in its efforts to enter the Middle Eastern market, having lost a number of tenders for mobile licences. It also lost out to MTC Kuwait in its bid for Celtel, Africa’s third-largest operator, which has more than six million customers in 13 African countries.

Analysts believe MTN may have better success tackling the Middle East in partnership with established players in this market. Business Report this week reported that MTN will hold talks with a member of Bahrain’s royal family about setting up a partnership that would help it expand in the Middle East.

Pallavi Ambekar, telecommunications analyst with Coronation Asset Managers, says the Iranian market would be first prize for MTN, which has made no secret of its plans to expand in the Middle East.

Johan Snyman, telecommunications analyst at First South Securities, says MTN’s move into the Middle East will broaden its geographical footprint outside of Africa. “The Middle East is wealthier than Africa so the potential for market growth is strong. I also have a sense that MTN may start running out of growth in Africa in the foreseeable future.”

MTN has operations in Nigeria, Rwanda, Cameroon, Uganda, Swaziland, Mauritius, and recently bought 100% of Telecel Zambia and 51% in Telecel Côte d’Ivoire. This gives it 18-million customers in nine African countries, 44% of them in South Africa. It is also on the short-list to acquire 51% of Nigerian fixed-line operator Nitel and its cellphone subsidiary M-Tel.