Worry over delay in MTN’s acquisition of Visafone

There are indications that the planned deal between telecom giant, MTN and Code Division Multiple Access-based operator, Visafone may linger for some time.

While the takeover negotiation continues, there is uneasiness among industry stakeholders about the acquisition deal which was reported to hover around $100 million.

Visafone started operations eight years ago to deliver voice and broadband services through mobile and fixed telecom platforms after business tycoon Jim Ovia, who also founded Zenith Bank, acquired three operators has been grappling with industry challenges in few years.

Speaking with Hallmark, the corporate service Executive in MTN Nigeria, Akinwale Goodluck, said the acquisition talks are still ongoing.

“The parties are still talking. The deal has not been concluded. Nothing at the moment has been concluded,” he said.

Asked when agreement would like be reached, Goodluck said there is no fixed date since the parties are still negotiating.

On his part, the Association of Telecommunications Operators of Nigeria (ATCON) president, Lanre Ajayi, expressed optimism of the negotiation’s success. In his words: “It will be a plus to the telecom industry, the owner of Visafone and MTN. Successful acquisition of Visafone would mean more job opportunities for Nigerians. But that would also portend concern in the industry because of near monopoly status MTN would then have, unless the industry regulator steps in.

When contacted on phone, the Director, Public Affairs in Nigerian Communications Commission (NCC), Tony Ojobo, said he does not have information about the deal.

According to him, “I am far away and not in the office. I don’t have information about it.  We will talk about it when I come back.”

For Steven Bello,  a former Commissioner in NCC, the successful acquisition of Visafone would mean a lot for the industry. He however stated that this is the right time for the CDMA operator to be acquired before it is too late.

“It will be remarkable in the industry because it will mark the end of CDMA industry segment. However, it will be ideal for Visafone owner, Jim Ovia, to sell it now before it finally collapses under him. The network has been struggling just like Multi-Link, Starcomms and ZoomMobile did before they left the scene,” he said.

Speaking further, Bello posited that acquisition of Visafone would make MTN bigger and bigger, a development he described to be unhealthy for the industry.

“MTN is gradually driving toward monopoly and NCC must anticipate this in the future. While it will be a wise thing for Jim Ovia to sell Visafone now, it is even wiser to strike a deal that would allow him equity in MTN. But I doubt if MTN will agree with that,” Bello added.

The president of the National Association of Telecommunications Subscribers (NATCOMS), Deolu Ogunbajo, also stated that a successful completion of Visafone/MTN deal would naturally threaten the national carriers- NITEL which was acquired by NATCOM and Globacom.

“It will be a welcome development for the industry, especially the data segment of telecom services. There would be a boost in broadband penetration because of Visafone technology which is noted for quality data and voice services,”Ogunbajo said.

Visafone’s entrance into the market in February 2008 was anticipated to weather the troubled waters which sank its competitors like Starcomms. MultiLinks, ZoomMobile.

But in the recent years, the harsh operating environment for the industry has started to take toll on Visafone’s status just as the GSM operators have also started struggling to sustain their market share.

The wireless-network operator, Visafone, which set up eight years ago to deliver voice and broadband services through mobile and fixed telecom platforms after business tycoon Jim Ovia, who also founded Zenith Bank, acquired three operators has in the past few years been faced with industry challenges and dominance of Global System for Mobile communications (GSM) operators.

On how the discussion for the acquisition would take, a source close to the deal said: “The deal is done. We’re almost putting ink to paper,” while another source said the talks would conclude “very soon”.

Both sources did not say how much MTN would spend on the purchase and how big a stake in Visafone it would take up. However, another source revealed that it would hit about $100 million.

debunked the reports of the deal and the stated amount. “It is true we are looking for expansion. But all that is being currently reported are mere rumours,” he said.

Attempts made to speak with the Head Corporate Communications of Visafone, Joseph Ushigiale, proved abortive, as there was no response from his phone.

However, MTN Group spokesman Chris Maroleng said the company did not comment on market speculation.

Visafone Communications Ltd was born out of the strategic acquisition of 3 CDMA mobile network operators that had been in operation for up to 8 years with 30,000 subscribers and coverage in different parts of Nigeria.

The company, which was incorporated in Nigeria on June 20, 2007 following the acquisition of Cellcom received its Unified Access Service Licence as a telecom operator from the Nigerian Communications Commission (NCC) on August 1, 2007 positioned it to offer mobile, fixed and any other telecommunications service to its subscribers.

The network’s entrance into the market in February 2008 was anticipated to weather the troubled waters which sank its competitors like Starcomms. MultiLinks, ZoomMobile.

But in the recent years, the harsh operating environment for the industry has started to take toll on Visafone’s status just as the GSM operators have also started struggling to sustain their market share.

In the hope of boost Nigerians’ hope about its services,  Visafone was reported to have raised over N30 billion through private placements of shares to a select group of investors for business expansion.

At the early stage of its operation, Visafone was commended by the industry stakeholders, including the Nigerian Communications Commission (NCC). The telecom operator is well placed to provide excellent data quality, given that CDMA has inherent advantages in enabling superfast data speed, Visafone has been thrilling every data customer or prospective user with value-added service. But the drive to hook more subscribers on its network has of the recent been waning, largely due to network coverage challenge.

Some industry analysts are of mixed feelings for the deal between telecom giant MTN and Visafone. They are of the view that the acquisition of Visafone would not add much value to the its operation. However, others are optimistic of positive result if the deal is sealed, considering the additional subscription market share it would afford MTN in the long run.