Ralph Mupita, MTN Group CEO, has moved to reassure staff that its South African business still has strong growth opportunities, despite the failed Telkom transaction − a deal that could have cushioned the telco in the fibre market.
In a leaked internal memo to staff yesterday, Mupita also paid tribute to the negotiators who led the collapsed merger discussions.
This is the first time the MTN boss has directly addressed the Telkom issue that has been playing out since July, when the potential tie-up discussions were revealed.
This week, the telco withdrew its non-binding offer to acquire all the shares of the telephony group for shares, or shares and cash.
“I would like to thank all MTNers who were involved in the discussions and the due diligence engagements we have had with Telkom, for their hard work.
“I would equally like to thank the team from Telkom, whom we engaged with professionally and respectfully over the last few months,” Mupita’s memo to staff reads.
“Our MTN SA business still has exciting and strong growth opportunities, and we continue to partner with Telkom on the national roaming agreement that we have in place.”
Telkom added MTN as roaming partner in November last year, giving it access to MTN SA’s 2G, 3G and 4G network, which helps it reduce overall roaming costs.
Its South African business is of great importance to MTN, as the unit remains one of the most lucrative operating companies across its 19 markets, contributing significantly to the group’s revenue.
In the latest reporting period, MTN SA recorded a healthy performance, while accelerating its focus on high-growth business areas, to deliver strong EBITDA and cash flow growth.
MTN SA closed the quarter ended March with a total of 34.5 million subscribers, an increase of 7.1%, driven by higher gross additions.
The postpaid subscriber base continued to expand, with an increase of 7.4% to 7.5 million. There was also a 7% increase in prepaid subscribers to 27 million.
In his memo, Mupita wrote: “We remain committed to deliver on our Ambition 2025 strategy to lead digital solutions for Africa’s progress and continue to consider various opportunities in this respect.”
The MTN Ambition 2025 strategy is anchored in building the largest and most valuable platform business with a clear focus on Africa.
This, it says, rests on scaling connectivity and infrastructure business, making use of both mobile and fixed access networks across the consumer, enterprise and wholesale segments.
The Telkom deal could have added momentum to the MTN strategy, especially in the fibre and enterprise markets.
Nonetheless, discussions on the potential merger collapsed, as Telkom could not provide exclusivity guarantees.
MTN was up against data-only network Rain and Toto Investments in the race to control Telkom’s lucrative infrastructure that includes fibre network and data centres.
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