(L-R) Phillips Oduoza, group MD/CEO, UBA Plc; Victor osadolor, deputy MD and Onikepo Akande, president, Harvard Business Scholl Alumni Association, during a recent courtesy call to UBA by the association.

MTN, a leading telecom company in Africa, is keeping over $5 billion for the acquisition of any available telecom company. BusinessWorld Intelligence can reveal that the company currently has a low gearing level, which means it can get more funds without putting much strain on its balance sheet.
Investigations also reveal that MTN’s aggressive expansion over the past few years will continue to be a key element of the group’s success as its two main markets, Nigeria and South Africa, increasingly come under pressure, especially with the entry of Bharti Airtel of India. Therefore, operations in other parts of the world will become more important.
A reliable source disclosed that “MTN is sitting on truckloads of money, so any acquisitions for expanding its business will not be a problem and in the medium term, we expect MTN to start giving traditional ICT providers a run for their money.”
Phuthuma Nhleko, MTN group’s chief executive officer, said the company has not completely abandoned the idea of doing another big deal in the near future. Nhleko said the company was cooling off on trying to find expansion opportunities, as there were very few deals available that would add substantial value.
He said the company was still open to the idea of acquiring companies as a way of expansion, as MTN is generating strong cash flows. Nhleko was speaking during the company’s results presentation for the first six months of the year to June. He said there could be regional consolidation opportunities from which the company can benefit, adding that MTN is aware that the telecom landscape is continuously changing, and it cannot ignore the possibility of doing more deals. Its gearing is also very low, which will allow it to acquire debt to finance a deal.
Africa’s cellular market is characterised by many smaller operators and a handful of large companies. Analysts have been expecting to see consolidation for some time and Nhleko said it has become a characteristic of the continent in the past nine months. However, “Opportunities that we regard as value accretive are few and far apart,” he said. Most of MTN’s recent growth had come from organic growth and the company has several failed bids under its belt.
Two years ago, MTN entered the first round of talks with Bharti Airtel before scrapping the discussions after failing to agree on a shareholding structure.
MTN reported revenue 2.2 per cent down, to R56 billion, during the half-year, while earnings before interest, tax, depreciation and amortization (Ebitda) declined 1.1 per cent, to R24.2 billion. However, a continued focus on costs aided the company in growing adjusted headline earnings per share 20.6 per cent, to 438.6c.