Local cellular network operator MTN Group has agreed to buy Middle Eastern mobile telecommunications group Investcom for $5.53 billion - about R33.5 billion.
The deal will see MTN offer to acquire for cash the entire issued share capital of Investcom, which is listed in London and Dubai.
The offer equates to a 27% premium to the price of Investcom`s global depositary shares on 28 April.
MTN`s CEO, Phuthuma Nhleko, says the deal enhances MTN`s growth prospects by securing a number of important new markets.
Investcom, which was founded in Lebanon in 1982, operates GSM mobile networks in Benin, Cyprus, Ghana, Guinea Bissau, Liberia, Sudan, Syria and Yemen.
It was also recently awarded licences to build and operate networks in Afghanistan and Guinea Republic, increasing to 10 the number of countries in which it operates.
The group says it is undertaking the deal to enhance its growth profile in Africa and the Middle East, to gain further scale in emerging mobile markets, to strengthen its operational capabilities and to diversify its financial profile.
It adds that the acquisition will create a group covering a population under licence on a combined basis of about 488 million people and serving more than 28 million subscribers.
MTN also has 10 operations - in Botswana, Cameroon, Ivory Coast, Nigeria, Republic of Congo, Rwanda, SA, Swaziland, Uganda and Zambia.
Irrevocable acceptance
Last month Investcom said at the release of its financial results for the year to December that total mobile subscribers had risen to 4.9 million - a 91% increase on the previous year-end.
Gross operating revenues of $903 million were 43% up on those of the previous year, while net profit rose 31% to $207.8 million.
An MTN spokesman says there are no overlapping operations between the two companies, and that 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.
According to an MTN statement issued ahead of a presentation scheduled for this afternoon, the deal would, given the "attractive competitive position of MTN Group and Investcom in their various markets", be in line with the enlarged group`s strategy to be the leading mobile operator across its footprint.
"Investcom`s cash-generative operations would make a sizeable contribution to the financial performance of MTN Group, enhancing its growth profile and diversifying revenues and earnings.
"The proposed transaction also offers the enlarged group the potential for increased revenue and reduced costs through regional cross-selling opportunities, enhanced economies of scale, technology and product sharing and the alignment of a centralised procurement system."
The offer is subject to approval by MTN shareholders and the fulfilment or waiver of various conditions.
Investcom`s controlling shareholder, M1 Limited, which owns about 70.6% of the company, has made an irrevocable undertaking to accept a cash and shares alternative and to become an MTN shareholder, with a lock-up of 14 months on the shares it receives.
The MTN share was trading 50c or 0.8% down at 5 950c on the JSE at midmorning today, having touched 6 100c earlier in the morning.
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