Telkom says MTN “attractive asset” but not considering buying it

JOHANNESBURG – South Africa’s Telkom believes MTN is an “attractive asset” but is not seriously thinking about buying a stake in sub-Saharan Africa’s biggest cell phone operator, Telkom said yesterday.

Head of Investor Relations Nicola White said Telkom was looking at all possible acquisition targets as it tries to expand in Africa to offset sagging revenues in its fixed-line phone unit, and did not rule out a bid for MTN in the future. But despite media speculation, White said Telkom was not seriously looking at buying a stake in MTN and was focusing on persuading Britain’s Vodafone to allow its joint-owned cell phone operator Vodacom more freedom to expand in Africa.”Obviously MTN is an attractive asset but we are not at the moment considering any corporate activity with regard to MTN,” said White, adding the company would look at “just about anything in Africa”.White also said talks between Telkom and Vodafone last week aimed at altering an agreement that bans Vodacom from expanding north of the equator failed to yield results.”There has been no finality reached …The talks will be ongoing until an agreement is reached,” White said.A team led by Telkom’s outgoing Chairwoman Nomazizi Mtshotshisa travelled to London to try to convince Vodafone that it should give Vodacom free rein to expand in Africa.Vodacom has been forced to watch from the sidelines as MTN snapped up assets in Africa, where demand for cell phones is booming due to poor fixed-line infrastructure.Vodafone last week declined to comment on talks with Telkom.South African media has speculated that if Vodafone refuses to change the shareholder agreement, Telkom may sell its 50 per cent holding in Vodacom and buy a controlling stake in MTN – an option Telkom has not ruled out.But analysts doubt Telkom could afford it.If Telkom sold its 50 per cent in Vodacom for 45-50 billion rand – the level most analysts say it is worth – and added the six billion rand in cash analysts expect it to generate this year, it could afford a maximum of 46 per cent of MTN at its current market value of 123 billion rand.Nampa-ReutersBut despite media speculation, White said Telkom was not seriously looking at buying a stake in MTN and was focusing on persuading Britain’s Vodafone to allow its joint-owned cell phone operator Vodacom more freedom to expand in Africa.”Obviously MTN is an attractive asset but we are not at the moment considering any corporate activity with regard to MTN,” said White, adding the company would look at “just about anything in Africa”.White also said talks between Telkom and Vodafone last week aimed at altering an agreement that bans Vodacom from expanding north of the equator failed to yield results.”There has been no finality reached …The talks will be ongoing until an agreement is reached,” White said.A team led by Telkom’s outgoing Chairwoman Nomazizi Mtshotshisa travelled to London to try to convince Vodafone that it should give Vodacom free rein to expand in Africa.Vodacom has been forced to watch from the sidelines as MTN snapped up assets in Africa, where demand for cell phones is booming due to poor fixed-line infrastructure.Vodafone last week declined to comment on talks with Telkom.South African media has speculated that if Vodafone refuses to change the shareholder agreement, Telkom may sell its 50 per cent holding in Vodacom and buy a controlling stake in MTN – an option Telkom has not ruled out.But analysts doubt Telkom could afford it.If Telkom sold its 50 per cent in Vodacom for 45-50 billion rand – the level most analysts say it is worth – and added the six billion rand in cash analysts expect it to generate this year, it could afford a maximum of 46 per cent of MTN at its current market value of 123 billion rand.Nampa-Reuters