Etisalat, the United Arab Emirates’ telecommunications company, is evaluating South Africa’s MTN Group as a potential acquisition target. It is part of a drive to expand its operation in Africa.

The company’s chairman, Mohammed Hassan Omran, disclosed the acquisition intention in a statement in Cairo, Egypt, yesterday. But this is coming after global mobil operator, Vodafone, Sunday, insisted that it had no plans to make a bid for MTN.
The UK group last week reviewed the case for making a bid for MTN after Bharti Airtel, India’s largest wireless operator, made an informal offer for a controlling stake in the Johannesburg-listed company.
“We are always looking for expansion in Africa,” Mohammed Omran told reporters at a telecom conference in Cairo, Egypt. “We are evaluating MTN among other companies.”
Etisalat is the incumbent telecommunications carrier and Internet Service Provider in the United Arab Emirates and is consolidating its network in Nigeria following the acquisition of a licence here for $400 million by its strategic partner – the Mubadala Development Company of the United Arab Emirates — early last year.
Mubadala, a strategic investment and development vehicle established and wholly-owned by the government of the Emirate of Abu Dhabi, was granted a 15-year renewable Universal Access Service Licence in Nigeria in March 2007.
If Etisalat goes ahead and makes a successful bid for MTN, it will significantly alter the equation in the Nigerian telecom market, where both companies currently operate as competitors. Such a successful combination of operation is likely to involve the search for operational synergies that could also result in name changes and personnel restructuring.
Telecom analysts told Business Day last night that it is yet early days, but that with Etisalat looking to grow its business in Africa, in particular with eyes on Nigeria, it could go ahead to firm up its audacious intention to have a good bite of MTN.
Etisalat is the operating partner in this co-operation and it holds 40 percent interest in the telecom company now known as Etisalat Nigeria. Mubadala now holds 30 percent interest in the company, while the remaining shares are held by Nigerian investors led by Hakeem Bello-Osagie, the former chairman of UBA Bank of Nigeria.
With this transaction, Etisalat’s addressable market will grow to 600 million potential customers, an increase of 30 percent.
The MTN Group is a particularly “beautiful bride” and well sought after by ambitious investors. In Nigeria, it has 17.8 million subscribers (March 2008 figures). The group announced in its last financial report that it had recorded 61.4 million subscribers across its 21 operations as of 31 December 2007. This represented an increase of 53 percent from 40.1 million subscribers as of 31 December 2006.
In addition, the MTN Group declared a dividend of 136 cents per share, its highest dividend ever. MTN’s earnings before interest tax depreciation and amortisation (EBITDA) EBITDA went up 42 percent to R31.8 billion.

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