MTN has bought a 36% stake in privately held company Leaf Wireless, formerly known as Leaf Data Industries, for an undisclosed cash payment in a deal closed late last week.
The two companies have a two-year association: Leaf is responsible for the MTNICE.co.za site, which offers consumers wireless data services, and is also the technology supplier for MTNOffice.co.za, a business site currently in development.
MTN says the deal is meant to give it a measure of control over the technology behind these portals.
"The portal element is becoming more and more important," says Bruce Cockburn, GM of the MTN Mobile Future unit. "With technology like GPRS [general packet radio service] we need a portal to aggregate content, otherwise people cannot use it."
Cockburn says MTN has an option to take a controlling stake in the company at a later date, but it has not yet done so, for fear of impeding the entrepreneurial spirit that drives the company.
Leaf MD Brandon Leigh says the company was started because he wanted to talk to his car. That goal has since been commercialised, with an application that allows users to control certain car functions remotely through a two-way vehicle tracking system. That application is in use by tracking company NetStar, and a deal has been struck with security company Chubb around a similar application for house alarms.
These applications share a common platform, which is also used in the MTNICE website, and MTN says gaining access to that intellectual property was another consideration in the purchase.
"MTN has had a relationship with Leaf for about two years and this investment means that both companies can secure and exploit joint intellectual property across existing and future projects," says MTN MD Sifiso Dabengwa in a statement on the deal.
Leaf employs Leigh`s mother and two brothers. The MTN deal will also remove the only other outside shareholder, ABSA, leaving the remaining 64% equity in the hands of the Leigh family and staff.
Cockburn says the acquisition has been in the works for around a year, and until recently Leaf said it planned to remain privately owned. But the reach of MTN seems to have prevailed.
"This partnership will give Leaf access to decision makers in businesses not only in South Africa and Africa, but internationally as well," Leigh says in a statement. "MTN is a highly recognisable brand that is seen to be both an innovator and market leader."
MTNICE became the operator`s largest web initiative with the partial closure of its MTNSMS.com website earlier this month.
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