MTN Stake in Telecel Limited to 40 Percent in Zimbabwe

Mergers, Acquisitions and Financial Results

MTN Group Ltd, Africa's largest mobile phone company, can only buy not more 40 percent of Orascom Telecom Holdings' interests in Telecel Zimbabwe, officials said last Friday.

One of the officials, who refused to be named, said the Telecel licence was clear on the shareholding status of Telecel, with foreigners allowed to hold not more than 40 percent equity in the mobile firm.

The official said Orascom, which controls 60 percent of the country's second largest mobile firm through its subsidiary, Telecel Globe, got a controlling stake when it partnered the Empowerment Corporation, a consortium of local businesspeople, but on the understanding that it would cede 20 percent to locals by 2007.

But Orascom has failed honour its initial deal to offload 20 percent of its 60 percent equity to indigenous players in the company.

"MTN can have more than 40 percent because the Telecel licence requires locals to hold a controlling 60 percent stake while foreigners hold not more than 40 (percent)," said one official.

Government cancelled the Telecel licence in August 2007 after the firm failed to meet the deadline of regularising its shareholding.

The High Court, however, granted Telecel a reprieve to continue operating pending determination by the Government.

Since then, the company has been operating without a licence, the original of which is due to expire in the next two-and-a-half years.

"By selling a 60 percent stake to MTN means Telecel shareholding will remain irregular," said another official.

Telecel Zimbabwe managing director Mr Aimable Mpore could not comment.

MTN is engaged in talks to buy some operations owned by Orascom Telecom.

The Egyptian company confirmed last week that negotiations were taking place.

The deal is worth about US$10 billion, according to reports.

MTN wants to add new markets to its 21 businesses across the Middle East and Africa as some of the world's largest operators, including Vodafone Plc, seek expansion in Africa to counter slowing revenue growth in Europe.

The acquisition of the units will include assets in Algeria, Zimbabwe, Egypt and Tunisia, business news publisher Bloomberg reported last week.

Orascom's current operations are in North Korea, Bangladesh, Pakistan, Egypt, Algeria, Tunisia, Central African Republic, Burundi Namibia and Zimbabwe.