Mergers, Acquisitions and Financial Results

Cellphone company MTN has curtailed negotiations involving some of its foreign assets, without the market ever working out exactly what deal may have been going down.

The company withdrew a cautionary notice last week that had kept the market speculating since November, and said that discussions relating to a potential transaction involving some of its non-South African assets had been terminated.

Since the cautionary notice had involved some existing assets, it clearly had not referred to any expansion into new territories. Moreover, it was believed that MTN was conducting a due diligence investigation prior to a potential acquisition, rather than as a prelude to selling operations.

That was backed up by a comment at the time from CEO Phuthuma Nhleko, who said the cautionary notice referred to exploratory moves prior to expansion, and MTN would not pull out of any of existing activities.

However, despite producing healthy interims and a third quarter update that confirmed its growth last week, MTN appears to be temporarily capping further short-term expansion.

Corporate relations executive Yvonne Muthien said the company’s goal was to become the leading cellular operator on the continent, but its immediate priority was to focus on its Nigerian network before it looked elsewhere.

MTN’s share price initially gained 4c to R13,25 after the cautionary was withdrawn, then lost ground to close 1c down at R13,20.

2003 Business Day