Mergers, Acquisitions and Financial Results

Talks to dispose of a 49 percent stake in Zimbabwe's ailing state-owned cellular operator, Net*One, have reached a crucial stage, with South Africa's MTN understood to be one of the companies in the running. The stake is expected to fetch US$33 million (R200 million). Net*One said earlier this year it was planning a strategic partnership.

Net*One's managing director, Reward Kangai, confirmed moves to dispose of the 49 percent stake were underway but would not say whether MTN was involved. "Yes, we received interest from different companies and we are (still) considering offers," Kangai told a South African business publication.

Media reports have suggested that Net*One is concerned potential investors may be worried whether they would be able to make a return on their investment considering Zimbabwe's economic and political crisis. Repatriating dividends might also be an issue, while Net*One's poor network service presented challenges.

Kangai said Net*One needed a capital injection to increase network capacity, adding that the company was considering the roll-out of a third generation service.

A Zimbabwean-based analyst said Net*One's network was "congested" and whoever acquired the stake would have to invest heavily in upgrading it. "Net*One has a wide coverage and has infrastructure; it just needs upgrading," he said. With just over 200, 000 subscribers, Net*One is Zimbabwe's second largest cellphone operator.

Financial Gazette