South African mobile group MTN has finally acquired a 60 per cent stake in Kenyan corporate communications solutions firm UUNET, whose holding firm is also South Africa-based, the weekly EastAfrican newspaper reports.
Senior officials at the Uganda subsidiary of the telecom giant confirmed the transaction, but referred us to the group's head office in Johannesburg, South Africa, for details. MTN Uganda is not officially allowed to comment on the acquisition as it was conducted at headquarters level.
The Johannesburg-based group executive for corporate affairs, Nozipho January-Bardill, also declined to comment on the deal, but said the telecom giant is actively seeking expansion opportunities.
"MTN does not respond to market speculation. The group is committed to its expansion strategy of actively seeking value-creating opportunities in emerging markets," she said in an email.
According to Premium Business Information Source Alacra Store, the group's last acquisition was on March 12, this year — New Clicks Holdings, a Cape Town-based pharmaceutical distributor.
MTN has been trying to get into the Kenya market for some years now. UUNET Kenya spokesman Kenneth Kareithi was more upfront, saying it was a done deal, although both parties were yet to issue a press statement.
"We've not told the media anything on this merger, but we will do so soon," he said on phone.
MTN will now have a chance to go head to head with Safaricom, which has ruled the roost in company performance for three years running.
At last year's CEO's Most Respected Company Survey gala held at Kampala's Serena Hotel, MTN Chief Executive Noel Meier said his company would take on Safaricom as the region's most respected company.
But this is not what industry analysts thought would happen since UUNET — which started out in Kenya in 2001 — is both a mobile operator and a broadband internet service provider, unlike other telecom operators that MTN has courted in the past.
The South Africans missed the first chance to enter Kenya's telecom domain in 2004, when the then Celtel International [renamed Zain in 2008] beat them to KenCell, which was being sold by French telecom company Vivendi.
But MTN's interest in the market did not ebb, buoyed, perhaps, by the realisation that Kenya is the most robust telecom market in the region, going by what Safaricom has achieved — more than 10 million subscribers, the biggest IPO in East Africa and a vibrant mobile money transfer service that rakes in millions.
However, Kenya offers other opportunities, particularly in the emerging data market segment and in business process outsourcing.
Because of this, MTN bid to buy a 51 per cent stake in 2007 in the state-owned Telkom, but lost to French Telecom, which last year rolled out the Orange service brand.
Just last month, there was talk of a possible takeover of Econet by MTN. Econet is Kenya's fourth mobile operator, trading under the Yu brand.
MTN is the continent's largest telecom company. It's drive for expansion comes as operators await the landing of undersea cables on the eastern coast to serve eastern and central Africa.
Once connectivity and call costs become less costly — analysts say by as much as 20-30 per cent — operators will look at growth in the lucrative industry.
MTN will consolidate its already intimidating profile on the continent — its profit went up 44 per cent last year to $1.6 billion while its earnings before interest, tax depreciation and armotisation was $5.22 billion in 2008.
This was a decline of 1.4 per cent from the previous year, but the earnings are expected to jump to $7.67 billion by 2013.
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