The MTN Group and Investcom on Tuesday announced a landmark deal to create the pre-eminent mobile operator in the emerging markets of Africa and the Middle East.
The companies have reached agreement on a transaction through a recommended offer in which the MTN Group will offer to acquire the entire issued share capital of Investcom, which is listed in Dubai and London, for a total consideration of $5,526-billion (R33,5-billion).
The transaction will build on the complementary strengths of each company to create a leader in the emerging-market telecommunications arena. The enlarged group’s increased scale and capabilities is expected to enhance long-term value for shareholders, customers and employees, creating significant potential for growth.
The recommended offer, at $3,85 per share (translating into $19,25 per global depositary share, or GDS) will be an all-cash offer, with shareholders also being given a cash and share alternative. This represents a 27% premium to the closing price of Investcom’s GDSs on April 28 this year.
Investcom’s controlling shareholder, M1 Limited, which currently owns approximately 70,6% of the ordinary shares of Investcom, has irrevocably undertaken to accept the cash and shares alternative and will become a shareholder in the MTN Group. M1 Limited has agreed to a lock-up of 14 months on the MTN Group ordinary shares it will receive in the offer.
The transaction will make the enlarged group one of the world’s largest emerging-market players in telecommunications and the clear leader in Africa and the Middle East, operating mobile networks in 21 countries, covering a population under licence on a combined basis of approximately 488-million people and serving more than 28-million subscribers.
The integration of Investcom’s experienced personnel will also broaden the proven management capacity within the enlarged group, facilitate knowledge transfer between the two operations and enable the enlarged group further to develop its business in the Middle East.
Said MTN Group CEO Phuthuma Nhleko: “We are delighted with this transaction, which delivers the next stage in MTN Group’s emerging-markets growth strategy. The MTN Group and Investcom have a shared vision to be the leader in developing markets and both companies have already shown excellent progress individually in this regard.
“This well-considered partnership entrenches our leadership in telecommunications in Africa and the Middle East and will optimise value for our shareholders. It also substantially enhances MTN’s growth prospects, securing a number of important new markets for the MTN Group.”
Investcom CEO Azmi Mikati added: “We believe this transaction represents the ideal platform for Investcom to realise its goal of being a leading emerging-markets telecommunications enterprise. We strongly believe that the combined group has a very exciting future — one I am personally committed to. The proposed transaction offers our shareholders the opportunity to participate in the growth of the number-one telecommunications group in the region, with a complementary geography and a scale of assets second to none.”
The offer is subject to approval by MTN shareholders and the fulfilment (or waiver) of certain pre-conditions and conditions precedent.
Investcom, a leading international provider of mobile telecommunications services with operations in Africa, the Middle East and Europe, had approximately 4,9-million mobile subscribers in Benin, Cyprus, Ghana, Guinea Bissau, Liberia, Sudan, Syria and Yemen at December 31 2005.
It has also recently been awarded GSM licences to build and operate mobile networks in Afghanistan and Guinea, expanding its operations to 10 countries and boosting its combined population under licence to approximately 147-million.
There are no overlapping operations between the two companies. The deal consolidates the MTN Group’s increased interest in the Middle East; with presence in Iran, Syria, Yemen and Afghanistan and management presence in Dubai, it confirms MTN’s position as a leading regional consolidator.
For the year ended December 31 2005, Investcom had revenues of $903-million and net income of $196-million. Investcom’s mobile operations comprise the most significant part of its business, having generated 93% of group consolidated gross revenues in 2005. In addition, Investcom provides international carrier services, principally through Mediterranean Network SAM in Monaco, in the United Kingdom and telecommunications engineering and consulting services.
Launched in 1994, the MTN Group is a multinational telecommunications group operating in Africa and the Middle East. The MTN Group is listed on South Africa’s JSE. At December 31 2005, the MTN Group recorded more than 23-million subscribers across its operations in Africa.
MTN operates in 10 African countries — Botswana, Cameroon, Côte d’Ivoire, Nigeria, the Congo, Rwanda, South Africa, Swaziland, Uganda and Zambia. Furthermore, the MTN Group will launch commercial operations of its network in Iran in the third quarter of 2006. — I-Net Bridge