South African cell phone operator Vodacom is considering a $480 million offer for MTel, the mobile arm of privatised Nigerian telecoms company Nitel, Nigerian newspaper This Day said on May 16.
Quoting sources close to the negotiations, This Day said Vodacom was looking to acquire 51 percent of MTel by paying $250 million to the Nigerian government for a 24 percent stake and $230 million to the new shareholder Transcorp.
Adedayo Ojo, head of corporate affairs at Transcorp, said the company was in talks with potential investors in MTel but declined to disclose any names or details.
"We are talking with potential technical partners who will be operators ... All options are open at this time," he said.
Nigeria has the fastest-growing telecoms market in Africa, although MTel has fallen far behind rival mobile phone firms because of mismanagement and cash problems at its parent, Nitel.
The payment to Transcorp would be in two instalments, This Day said. Vodacom, jointly owned by South African fixed line firm Telkom and Britain's Vodafone, would start by acquiring an 18 percent stake in MTel from Transcorp, with an option to buy a further 9 percent within three years.
Vodacom's spokeswoman could not immediately be reached. This Day said the deal was very far from being concluded as MTel was a wholly-owned subsidiary of Nitel and it was unclear how Vodacom would acquire MTel without taking on some of Nitel's liabilities. The newspaper also said a private Nigerian firm, Alheri Engineering, was considering a counter-bid for MTel.
Vodacom tried repeatedly to enter the Nigerian market by buying mobile phone firm Vmobile, but it eventually lost out to rival Celtel.
Vodacom had also expressed an interest in buying MTel last year but in September Nitel and its mobile subsidiary were sold to Transcorp, a conglomerate owned by Nigerian business tycoons with close ties to President Olusegun Obasanjo.
Transcorp has suffered a series of setbacks in its efforts to turn round loss-making, debt-laden Nitel, whose lines are constantly disrupted by technical faults and which is in such disarray it goes for months without billing customers.
Transcorp's technical partner, Britain's BT Group Plc, pulled out over lack of funds and corporate governance issues, sources close to Nitel said last month. BT and Transcorp have said they were still in talks over their arrangement.
Transcorp borrowed money to pay $500 million for its 51 percent of Nitel and had expected to pay back its debts through an initial public offer, but This Day reported that the IPO was 70 percent undersubscribed. Transcorp's Ojo said that report was inaccurate and the IPO results would be published soon.
Transcorp was set up in 2005 and quickly snapped up state assets including oil exploration licences and a Hilton-branded hotel. The deals were controversial because of Transcorp's connections to Obasanjo, who media reports said owned shares in it.
Nigerian analysts say Transcorp is vulnerable because Obasanjo, whose backing has been essential to the company, steps down as president in two weeks.