MTN ups African stake by R1.6bn

Johannesburg, 07 Jul 2006

South African mobile operator MTN has increased its stake in its operations in C^ote d`Ivoire and Uganda by R1.58 billion, it said in a note to the JSE yesterday.

The cellular firm said the new shareholding in MTN C^ote d`Ivoire was effective from 1 May, while its new holding in MTN Uganda was effective from 6 July.

The group`s executive VP for the Middle East, North and East Africa region, Irene Charnley, commented: "MTN Uganda has performed well over the years amid intense competition, giving us confidence in the business."

It acquired 32.44% in MTN Uganda from Swedish telecoms company Overseas Telecom (which is 65%-owned by TeliaSonera), for 130 million euros, or R1.19 billion, based on an exchange rate of R9.17 at 7:45am today. The deal, concluded yesterday, will take MTN`s holding to 84.45%, up from 52.01%, and will result in MTN Uganda being fully consolidated as a subsidiary and not a joint venture.

In its year-end results for the nine-months to end-December 2005, having moved its reporting period, it said the Ugandan operation enjoyed a 63% market share.

During the last reporting period, it spent $36 million in network infrastructure and was subsequently awarded a government tender to provide infrastructure for universal service in the eastern and western regions of the country.

One million subscribers

Revenue to end-December was $134 million, and the Ugandan operation surpassed the one million subscriber mark during this period. There are about 26.9 million people in Uganda, of which about 5.4 million are expected to own a cellphone by 2010.

The company also said it had increased its stake in the C^ote d`Ivoire operator, Loteny Telecom, by 17.34%, taking its stake to 68.34%, from 51%. MTN purchased this stake from Atlantique Telecom for 42.75 million euros, or R391.9 million.

MTN entered the country in July last year and the operator had a 47% market share. Of the 20 million people in the country, 6.3 million are expected to have cellphones by 2010. Since the acquisition, it has invested over $20 million into this operation. The bulk of this investment has been spent on network equipment and IT systems.

However, C^ote d`Ivoire recently awarded another GSM licence to Comium Mobile, taking the total number of operators to four. Comium plans to launch commercially in the second quarter of 2007, placing some competitive pressure on MTN, which reported revenue of $119 million to end-December last year.