MTN to buy Vodacom Congo?

MTN will not confirm or deny media reports saying it is in discussions to buy out Vodacom's wireless unit in the Democratic Republic of Congo (DRC).

Media reports citing unidentified sources say MTN is in talks to acquire the Vodacom Congo business.

However, Rich Mkhondo, executive of corporate affairs at MTN, says the operator has no statement on the matter.

“We can't say anything at this stage, because we don't talk about our business opportunities. We look at different business opportunities everyday and we can't talk about each one. At the moment we are not saying anything about it.”

Vodacom also failed to shed any light on the matter, saying only that CEO Pieter Uys mentioned at the company's annual results announcement, in May, that investment bank Rothschild had been appointed to explore options for the DRC business, and that process is still under way.

Vodacom is embroiled in a year-old dispute with co-owner Congolese Wireless Network (CWN).

It has also battled financially, reporting an operating loss of R282 million from revenue of R1.6 billion in the year to March.

Analysts say Vodacom cannot afford to exit the DRC, because the country is vital to its African expansion plans, and a key stepping stone to the rest of Africa.

Outside of SA, Vodacom has operations in Tanzania, the DRC, Lesotho and Mozambique. It wants to expand further into Africa, but faces entrenched competition from large players such as MTN and Bharti Airtel.

Vodacom executive head of media relations Richard Boorman said in July the DRC operation gained subscribers in the three months to June. At that point, it had 4.2 million customers, a 24% gain year-on-year. However, average revenue per user dropped 8% in US dollar terms.

Vodacom, which owns 51% of the operation, has been locked in a dispute with CWN, which owns a 49% stake in the operation, for several months over a funding agreement between the shareholders.

CWN says Vodacom International has plundered Vodacom Congo of capital and accused the company of fraud.

The Congolese company accused Vodacom of forcing its DRC operation to pay up to $180 million to satisfy loan agreements with “uncommercial terms and conditions”. In January, CWN threatened to take the matter to the courts in Kinshasa.