South Africa's MTN Group Eyes Further Overseas Expansion
Published on: 13th May 2014
By: Ian Mansfield
South Africa based MTN Group is eying opportunities to expand in the Asian market having ruled out any more attempts to merge with an Indian partner.
The company faced political pressure from South African politicians to ensure that the company remains a majority South African owned company, which has made it difficult for the firm to expand overseas through share based mergers.
It needs to pay cash, or seek deals where share based transactions do not substantively dilute the South African shareholders stake in the firm.
Citing people familiar with the company's plans, Bloomberg News confirmed that MTN is indeed now seeking medium sized deals, mostly in Asia to help expand the size of the company, without worrying domestic politicians.
Currently, the South African government owns a 14 percent stake in MTN through a state pension fund.
"We're beginning to open to the idea that these companies are going international, but their South African weighting must be preserved," Adam Habib, the vice chancellor of Johannesburg's University of the Witwatersrand told Bloomberg.
To help avoid shareholder dilution, MTN can tap into its USD4 billion cash pile, and seek to increase debt.
One potential target being cited though is Luxembourg based Millicom, which has operations in Latin America and across Africa. Such a deal would cost around USD10 billion, but not overly dilute MTN's USD40 billion market capitalisation.
Millicom is also a well regarded owner, which can help offset some of the regulatory risks that come from investing in some countries.
On the web: Bloomberg News