Cellular network MTN has become a wholly owned subsidiary of M-Cell, a JSE-listed company. Johnnic Holdings, which holds a controlling stake in M-Cell, says this will make it easier to raise money for further expansion into Africa and to make a bid for the second fixed-line licence in 2002 and 2003.
The deal will see parastatal Transnet swop its 23% direct stake in MTN for a 24% holding in M-Cell, while Johnnic is to retain control of the company by buying 75 million M-Cell shares from Transnet for R2.5 billion.
Johnnic Communications will announce a rights issue later this month to raise an estimated R3.8 billion to pay for the M-Cell acquisition and the R1 billion debt incurred in an earlier acquisition.
Transnet MD Saki Macozoma says his company did not have the resources to provide MTN with the capital it needed. "MTN needs to grow and expand, particularly outside the borders of the country," he says.
M-Cell chairman Irene Charnley says MTN has operations in Uganda, Rawanda, Cameroon and Swaziland, and will soon have networks in Kenya and Nigeria. She says the company has been approached to become involved in the mobile markets in Zimbabwe and the Democratic Republic of the Congo, and there is potential for a merger with other African operators.
Charnley says a third-generation mobile licence and the deregulation of the fixed-line telecoms market will present more opportunities for which MTN will need capital. "The deregulation of telecommunications opens up tremendous opportunities for us in SA and we wish to position ourselves to be a possible full service telecoms operator in the future."
M-Cell owns the Orbicom satellite business, while Transnet owns Transtel, which lays claim to the largest private telecoms network in Africa.
Public Enterprises minister Jeff Radebe says the government, through Transnet, will be a passive investor in M-Cell, but the option to change that role will be kept open.
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