MTN confirms Nigeria deal

By Damaria Senne, ITWeb senior journalist

Johannesburg, 14 Dec 2007

Pan-African mobile provider MTN has confirmed that it launched a private placement offer as part of the process to broaden the ownership of MTN Nigeria among that country`s nationals.

However, it would not provide details as to the scope and terms of the transaction, only saying the deal is one of the largest private placements undertaken in Nigeria by a multinational corporation.

"The private placement offer is a private and confidential process and information thereon cannot, therefore, be disclosed," says MTN Group corporate affairs.

Earlier this week, Business Day Nigeria said the MTN Group will sell 3.5% of its MTN Nigeria shareholding, worth 121 billion naira (R2.24 billion). MTN Nigeria`s market capitalisation is estimated at R80 billion, and MTN currently holds 82% shareholding in its Nigeria operations.

The report gave details of the terms of the transaction. The private placement is open to individuals at a minimum of $5 million, and corporates at a minimum of $10 million worth of shares, it said.

The deal is managed by Nigeria`s IBTC Chartered Bank. The bank may also create a special purpose vehicle that will acquire a block amount of shares, and then resell to Nigerian individuals at a minimum of $100 000, the report said.

Playing its part

Yesterday, MarketWorks business advisor Steve Edwards suggested the deal could represent MTN`s capitulation to pressure of extortion at an economic and political level. A local financial analyst also criticised the deal for having a high barrier of entry for individuals, at $5 million minimum, effectively making it inaccessible to ordinary Nigerian citizens.

"You can`t go and identify a couple of wealthy people and try to do a deal like that. You have to make it more broad-based, so you really empower local people," the analyst said.

As there is no formal empowerment framework in Nigeria, MTN should have taken the lead and set an example of how it should be done, he added.

MTN says it is aware of its role as a contributor to economic transformation in all the markets where it operates. The company says it voluntarily applied SA-rooted policies and practices such as employee training, local supplier support, diversity in the workplace and environmental management where these initiatives were deemed progressive.

"We are standardising all operational processes, systems and structures between the companies to ensure consistency. This initiative will ensure that our support for local suppliers and empowerment initiatives are implemented in all new operations."

The company says it is also increasingly sourcing high-value items and services such as computer services, stationery and other consumer products from local small and medium-sized businesses where available.

As at 31 December 2006, the value of goods and services sourced from local suppliers across all operations amounted to R7.4 billion, the company says.

MTN SA broad-based black economic empowerment spend contribution to the group total was R1.9 billion, it says. This figure excludes R86 million that MTN SA spent on entrepreneurial development, it says.