Indian offer for MTN fails to draw move from Vodafone

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Andrew Parker and
Philip Stafford
FT Syndication Service
LONDON: Vodafone insisted early this week that it had no plans to make a bid for MTN, a leading mobile phone operator in Africa and the Middle East.
The VK group early this month reviewed the case for making a bid for MTN after Bharati Aortal, India's largest wireless operator, made an informal offer for a controlling stake in the Johannesburg-listed company.
Bharti's indicative offer was for 51 per cent of MTN's equity at R160 per share. That valued MTN's entire equity at about $37bn.
"We have no intention of pursuing an offer for MTN," a Vodafone spokesman said.
People familiar with the matter could not rule out Vodafone changing its stance in the future, and making an offer for MTN, but they added such a move was highly unlikely.
Vodafone has been focused on trying to secure control of Vodacofn, South Africa's largest mobile operator, but those efforts suffered a setback late last year.
Vodafone owns 50 per cent of Vodacom, and Telkom, South Africa's leading fixedline phone company, owns the remainder.
Telkom had been holding talks with Vodafone about selling its Vodacom stake to the UK group, but those discussions were terminated in November, and have not resumed.
The Vodafone spokesman said: "We are committed to Vodacom and if the opportunity arises to increase our stake in the company then we would look to enter into discussions with Telkom."
Arun Sarin, Vodafone's chief executive, said last year that the UK group wanted to use Vodacom as a springboard to launch further mobile businesses in Africa.
If Vodafone was to alter its stance and make an offer for MTN, it would likely be because it saw no way of getting control of Vodacom via a deal with Telkom.
South Africa's other two mobile phone operators are Cell C and Virgin.
The South African government is Telkom's largest shareholder, which makes the company politically sensitive, and therefore also complicates Vodafone's efforts to secure control of Vodacom.
A combination of Bharti and MTN would create a mobile powerhouse in emerging markets that could compare in size to America Movil, the Latin American wireless group.
It would also be a competitive threat to Vodafone, particularly given the UK group's 50 per cent stake in Vodacom and its control of Vodafone Essar, India's fourth-largest mobile operator.
Analysts regard China Mobile, the world's largest mobile operator by number of customers, as another potential suitor for MTN. In 2006 it came close to buying Millicom, another mobile operator in emerging markets.