Mergers, Acquisitions and Financial Results

According to Nigeria’s Daily Champion the Econet operation in Nigeria (only part owned by the parent company is actually looking for fresh capital injection from the South African company Vodacom.

The Daily Champion said it had "gathered authoritatively last night that Econet’s spirited search for a lifeline followed its dissastisfaction with an offer of US$150 million facility, which its parent company, Econet Wireless Zimbabwe, had promised to inject into its operation, an amount considered by the local company as a drop of water in the ocean, considering its present financial need.With the US$150 million offer, the parent company would increase its stake from five per cent in the local company owned over 90 per cent by Nigerians and firms.

Before approaching Vodacom, Econet reportedly sought help from BT of UK, Orascom of Egypt among others, which sources said did not show enough interest in the proposed deal. The lot finally fell on the reluctant Vodacom, which is now reportedly studying the proposal from Econet Wireless.

Vodacom, it was learnt, is satisfied with its leadership of the South African market and is not eager to engage in market war with MTN Nigeria, which it says has a head start in Nigeria.

Independent outsiders believe that the approach to Vodacom by Econet’s Nigerian investors is part of their argument with the parent company over the value of their shares. The Nigerian investors are currently in a bind. They have neither the extra funds required (US$1.4 billion by their reckoning) to keep investing against their main competitor MTN, nor do they seem to have found other interested external investors: Vodacom looks like a reluctant suitor who is only showing interest so as not to offend. There will be tears before bedtime if the Nigerian investors do not face the unhappy truth that the company is probably not worth the price they have in mind.