Nigerian CDMA operator Starcomms is reportedly negotiating a deal to acquire rival Multilinks, the local unit of Telkom SA, according to Nigerian newspaper THISDAY.
Despite Telkom’s board having rejected a proposal by former CEO, Reuben September, to merge its Nigerian business with Starcomms back in January 2010, the pair are currently said to be negotiating a price for Multilinks, which was put up for sale in November 2010.
Since then, Multilinks was reported to have attracted interest from Etisalat Nigeria, but this was later denied by the UAE-owned company’s CEO Steve Evans.
Telkom acquired a 75% stake in Multilinks on 1 May 2007 for USD280 million, and purchased the 25% it did not already own from Kenston Investments in January 2009 for USD130 million.
However, Telkom has failed to turn around the fortunes of the ailing company, which has struggled to survive in Nigeria’s fiercely competitive market, and wrote down the value of Multilinks by ZAR5.2 billion (USD751 million) in the financial year ended 31 March 2010. Telkom CEO Jeffrey Hedberg has estimated the ‘exit cost’ at anywhere between USD100 million and USD180 million.