MTN and Telkom Eye Zimbabwe’s national incumbent

Mergers, Acquisitions and Financial Results

South Africa's MTN and Telkom have made advances for State-owned mobile and fixed telecommunications companies NetOne and TelOne, respectively, Government sources confirmed this week.

MTN and Telkom's separate interests in the State firms had since last year been a subject of speculation, but Government sources have confirmed the cash-rich South African firms are eyeing the local entities.

These two are among a handful of foreign firms that have reportedly expressed interest to buy some of the Government's stake in the companies and inject a dose of fresh capital.

NetOne has struggled with funding to expand its network and introduce new services as competition increases, while TelOne has failed to replace some outdated infrastructure or connect more subscribers.

NetOne, the first mobile company to be awarded a licence, has become the smallest, after Econet and Telecel, while TelOne has struggled despite its monopoly.

A senior Government official confirmed that MTN and Telkom had made formal bids for the troubled State telecommunications firms.

He said Government was in the process of considering the bids, adding that the investors' proposals would soon be presented to Cabinet.

"Several firms have expressed interest in NetOne (and TelOne) and we are in the process of conducting a due diligence on these bids. They will soon be presented to Cabinet before we choose the winner. Yes, MTN and Telkom are some of the companies that have expressed interest in the companies (NetOne and TelOne," said the source.

MTN is a growing pan-African mobile phone operator that has been expanding its footprint across the continent and the Middle East.

Telkom is a private company in which the South African government holds a 38 percent stake. It is estimated to be worth R97 billion.

Despite NetOne being the oldest and initially the largest of the country's three mobile phone operators, it has fallen behind in the last few years to become the smallest with only 500 000 subscribers.

Efforts to get comment on progress pertaining to the deal from NetOne managing director Mr Reward Kangai were not successful as he was said to be in meetings.

However, Mr Kangai early last year said capitalising the firm would require about US$200 million and that the company was valued at US$500 million in 2006.

On the other hand, TelOne had not responded to questions sent to it by Herald Business at the time of going to print.

Econet Wireless Zimbabwe is the country's biggest mobile phone operator with just over three million subscribers while Telecel is now the second biggest with about 600 000 subscribers.

TelOne has failed to overhaul most of its old infrastructure and connect more subscribers despite being the country's sole fixed phone operator and presently has only 386 000 subscribers countrywide.

About 50 percent of the fixed phone operator's total subscribers are in Harare and 17 percent are in the rural areas, according to the Postal and Telecommunications Regulatory Authority of Zimbabwe.

Government plans to dispose of some of its interest in State enterprises and parastatals in the oil sector, air transport and railways, particularly in loss-making and under-performing entities.

The Herald