MTN Vs Vodacom In 2005 - Coming Fighting Out Of The Yellow Corner...

by Fin24.co.za
2005-12-26 00:00:00 | Viewed 2446 times

2005 has been a tremendous year for MTN, while fortunes for the largest mobile phone operator in South Africa, Vodacom, have faired poorly in contrast.

As news regarding Vodacom's withdrawal from a joint bid with parent company Telkom for an equity stake in Nigerian fixed line operator Nitel filtered through this morning, MTN's share price had just gained 6.2% to close at R48.96 on the back of its reported acquisition of a 49% stake in Irancell. Irancell is a consortium that is set to launch Iran's second cellular operator. Vodacom's withdraw from its joint bid with Telkom follows its alleged recent behind the scenes machinations with JSE listed telecoms purveyor Altech to convince Econet a 5% shareholder in Nigerian network operator V-Mobile to drop its suit against V-Mobile management. Econet's protestations to Nigerian federal courts that V-Mobile management had altered a contract to accommodate Vodacom in Nigeria thereby denying Econet the right of first refusal to up its 5% stake to 51% prompted Vodacom's expulsion from Nigeria. Econet has since severed its ties with Altech dashing any prospects of Vodacom's return to Nigeria through the Econet door.

With the Econet door firmly shut in Vodacom's face, the only option available to Vodacom's dignified return to Nigeria would have been through its successful joint bid with Telkom for an equity stake in Nitel which has a cellular arm M-tel. The Nigerian Bureau of Public Enterprises (BPE)-agency tasked to oversee privatisation of public enterprises- is selling Nitel as a package.

"Vodacom's preference is to invest in a pure mobile industry, granted the BPE's position we have decided to withdraw from this process" said Field.

Field says however that Vodacom remains open to an equity investment in Nitel's mobile business should a favourable opportunity arise. Vodacom's short-lived stay in Nigeria not only cost the group R53m but also the opportunity to establish itself as a formidable player in Africa's most profitable-judging by MTN's experience-and potentially largest cellular market.

MTN has taken advantage of Vodacom's absence to grow its presence in Nigeria investing well over R6bn in the past year on infrastructure.

Estimates by Nigerian communications commission (NCC)-Nigeria's telecoms regulatory body- suggest that there are over 14m cellular subscribers in Nigeria of which 4m of the total subscribers only signed up in the first five months of 2005. While Vodacom's expansion trail has hit a lull, MTN has in past three months netted a hat trick of acquisitions that includes Telecel-Zambia since re-branded MTN-Zambia, Telecel- Cote-d' Ivoire trading as Loteny telecoms and has been re-branded MTN-Cote d'Ivoire and now Irancell.

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