MTN fights to stay in Benin

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 10 Jul 2007

The MTN Group is seeking to stay in business in Benin, after the country's telecommunications regulator threatened to order the cellphone giant to cease operations by Thursday.

News agency Reuters reports MTN was given the ultimatum to force it to sign a new contract with government. The agency adds MTN and another operator also have to pay fines of $50 million (R348 million) "because they changed the names of their Benin units without permission".

"There are some regulatory matters that have been raised in Benin and the MTN Group is currently engaged in discussions to resolve those with the Ministry of Communications there," says MTN group executive for corporate affairs Nozipho January-Bardill. "MTN cannot comment further at this stage."

MTN inherited the former Areeba Benin as part of its Investcom deal last year. In March this year, the company had 514 000 subscribers in Benin.

In December the operation had market share of 40% and reported revenue of R289 million and EBITDA of R150 million.

The SA-based global player paid $5.5 billion for Investcom in July last year. Investcom had a presence in 11 countries in the Middle East and Africa, including Benin. The acquisition added 6.1 million subscribers to MTN's portfolio.

At the time, MTN CEO Phuthuma Nhleko said the deal enhanced MTN's growth prospects by securing a number of important new markets.

Investcom was founded in Lebanon in 1982 and operated 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.

MTN said the buy was part of a programme to enhance its growth profile in Africa and the Middle East, to gain further scale in emerging mobile markets, strengthen its operational capabilities and diversify its financial profile.

It has since announced further acquisitions and growth plans. MTN earlier this month rebranded several of the Investcom businesses.