MTN’s Purchase of Visafone Said to Be in Doubt Without Spectrum
7 October 2016
MTN Group Ltd. is considering abandoning the acquisition of Nigerian internet provider Visafone Communications Ltd. after the country’s industry regulator ruled that broadband spectrum shouldn’t be included in the deal, according to two people familiar with the matter.
Africa’s biggest wireless carrier by sales is deciding whether acquiring the closely held company is worth it without the spectrum, said one of the people, who asked not to be identified as the deliberations are private. The deal valued Lagos-based Visafone at about $220 million, according to both people.
MTN didn’t immediately respond on a request for comment.
The Nigerian Communications Commission ruled last week that taking control of the spectrum would increase MTN’s dominance in the country, its biggest market. The Johannesburg-based carrier and competitors including Bharti Airtel Ltd.’s local unit are seeking to expand their internet coverage in Nigeria as growth in voice services slows. MTN agreed to pay almost 19 billion naira ($59 million) for spectrum as part of a government auction in June this year.
The NCC ruled in favor of MTN’s purchase of Visafone in December, according to an agreement seen by Bloomberg and signed by the regulator’s legal head, Yetunde Akinloye.
International ratings agency S&P downgraded MTN to junk status on Friday to reflect increased risk in Nigeria, where the phone company agreed to pay a 330 billion naira fine earlier this year for missing a deadline to disconnect unregistered subscribers. Last week, Nigerian lawmakers raised new allegations about the wireless carrier, accusing the company of illegally moving almost $14 billion out of the country. MTN denied the claims.
MTN shares fell 0.8 percent to 116.53 rand as of 2:02 p.m. in Johannesburg, valuing the company at 215 billion rand. The stock has declined 39 percent since the Nigeria fine was first reported last October, compared with a 2.8 percent gain at crosstown rival Vodacom Group Ltd.