MTN bid 'not predatory'

Johannesburg, 01 Jul 2008

Huge Group shares traded as low as 330c on the JSE yesterday, losing 5.4% before clawing back to end the trading session at 345c, 4c down on the previous close.

This came after MTN's bid for iTalk Cellular threatened Huge's own acquisition of the exclusive MTN service provider.

ITWeb reported yesterday that Huge was preparing to contest MTN's efforts to acquire the remaining shares in iTalk it does not already own, as Huge believed its objection had enough merit to see the Competition Commission block the cellular giant's bid.

Huge Group CEO Anton Potgieter said the proposed MTN deal substantially lessened competition in the mobile telecommunications market.

However, MTN says its move had nothing to do with Huge making a firm offer for the 59% of iTalk still held by the Bebinchand Seevnarayan Trust.

MTN did not initially exercise its rights or pre-emption because, based on the information it was given at the time by the seller, the value proposition did not make sense for the company, it says.

"When we declined the original offer, we did so on the basis that we would be entitled to revisit the proposed transaction if there was a material change in the structure and price of the transaction," comments MTN SA MD Tim Lowry.

"We were subsequently provided with further information by the seller which materially changed the structure and price of the transaction.

"This change made the value proposition of the transaction reasonably attractive for us and so we decided to exercise our rights of pre-emption," Lowry explains.

He says the iTalk acquisition would improve MTN's distribution network across SA, but particularly within KwaZulu-Natal and among the Indian community, which is one of iTalk's core consumer categories in that region.

The Competition Commission is expected to make a decision within three to six months. MTN says although it is mindful that certain conditions need to be met, it is confident the acquisition will meet with the commission's approval.