South African telecoms group acquires Dubai rival for $5.5bn
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The battle for market share in the Middle East and African mobile telecoms sector heated up after South African operator MTN, Africa's largest mobile carrier, snapped up Dubai-based Investcom in a deal worth more than $5.5bn.
MTN becomes the second-largest emerging markets mobile telecoms player with 28.1 million subscribers across 21 countries. Although it still trails Egypt's Orascom Telecom, which also operates in Italy, it puts the company on a sound footing when competing with the likes of Kuwaiti MTC, which bought African operator Celtel in a $3.4bn deal in March 2005, Norway's Telenor and even British Vodafone which upped its stake in South Africa-based Vodacom late in 2005.
Following waves of consolidation in eastern Europe over the past two years, Africa and the Middle East have become the focal points for mobile telecoms companies looking to drive revenue growth at rapid rates.
Operating in these areas offers massive growth potential as mobile penetration is very low, demand is very high and there is little competition from fixed-line operators. Companies such as Vodafone have committed themselves to investing in emerging markets as a means to offset declining voice prices in mature markets in Europe. Subscriber growth, which is already growing rapidly, is expected to explode as cheaper handsets designed specifically for poorer regions and costing as little as $20 become widely available.
Building mobile phone networks in Africa and the Middle East is also cheaper than investing in new network technologies in mature markets. With demand concentrating on basic voice services, mobile operators can take advantage of older, cheaper network equipment.
Investcom, which was established in Beirut during the 1980's, is listed in Dubai and has a secondary listing in London. Nevertheless, the founding Mikati family still controls nearly 71 per cent of the company's shares. Following the cash and share bid, the Mikati family will be one of MTN's largest shareholders, holding a stake representing roughly 10 per cent of the South African company's shares.
MTN chief executive, Phuthuma Nhleko, said the acquisition of Investcom enhances the company's growth prospects and provides access to a number of new markets. There is no overlap in the company's operations.
As a result of the takeover, Investcom has aborted its attempt to bid for Millicom International Cellular, an emerging markets mobile carrier based in Sweden. MTN doesn't intend to pursue the bid.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments