MTN likely to forgo fixed-line partnership

By Damaria Senne, ITWeb senior journalist

Johannesburg, 15 Nov 2006

The MTN Group is more likely to go it alone as it expands into emerging markets, rather than look for a fixed-line operator partner, say analysts.

This viewpoint follows media speculation that China Telecom may be preparing to bid for a shareholding, or even a takeover, of MTN.

China Telecom is a wire-line telephone, data, Internet and leased-line services provider, which operates in 20 provinces and municipalities in China.

Media speculation also attributed an increase in MTN's share price this week to the possibility of a China Telecom takeover.

While MTN would not comment directly on the speculation, a statement from the company notes it will continue to identify and pursue value-enhancing expansion opportunities that meet its key investment criteria for expansion in Africa and the Middle East.

Further comment from the company indicates expansion opportunities could come in many forms, and may not specifically exclude fixed-line partnerships.

However, Irnest Kaplan, founder and MD of Kaplan Equity Analysts, points out that the necessity has not arisen in the 14 years the group has operated. As MTN expanded in Africa, there was no need for a fixed-line partner, he notes.

Instead, MTN has invested heavily in telecoms infrastructure, and in some instances, has ended up with more infrastructure than the local fixed-line operator, Kaplan claims.

BMI-TechKnowledge analyst Richard Hurst, who sees MTN as a "bit of a maverick", notes the company may prefer going alone, as indicated by its willingness to expand into markets like Iran that may be politically sensitive in the global arena.

If the group is to retain the "maverick" quality, it would make sense for it to go it alone as it expands into emerging markets, he says.

"They have done very well in Africa, and how their entry into the Middle East pans out remains to be seen. It would also be interesting to see where the group goes next once it has penetrated the Middle East market."