Green light for MTN`s $5.5bn purchase

By Iain Scott, ITWeb group consulting editor

Johannesburg, 28 Jun 2006

MTN`s proposed purchase of Middle Eastern operator Investcom has received support from both groups` shareholders.

MTN shareholders voted in favour of the $5.53 billion acquisition yesterday and MTN says shareholders owning 78.1% of Investcom have also accepted the offer.

The South African cellular network operator announced at the beginning of last month that it was buying Beirut-based Investcom, which operates cellular networks in 10 Middle Eastern and African countries.

MTN president and CEO Phuthuma Nhleko, says the approval of the deal by MTN shareholders brings the group closer to its goal of consolidating its position in Africa and the Middle East.

The group says it will now apply to the JSE to list up to 204.3 million new shares. This is partial payment for the acquisition.

Investment grade ratings

At the same time, Moody`s Investor Service and Fitch have awarded MTN its first international and national investment grade ratings.

It has received a global scale rating of Baa3 and an A3.za South African national scale rating from Moody`s, while Fitch has awarded a South African national long-term rating of A+(zaf) with a stable outlook.

MTN says it sought the ratings as part of the process of funding the Investcom deal.

According to Reuters, the group expects to price bonds worth up to R8 billion next week and to raise the rest of the purchase price with syndicated loans.

The MTN share, which lost 27c or 0.5% to close at 5 048c yesterday, was trading 48c or 1% down at 5 000c at 10.32am today.