(Updates with analyst’s comment starting in fourth paragraph.)
Oct. 17 (Bloomberg) -- MTN Group Ltd., Africa’s largest mobile-phone company, is seeking to buy Vodafone Group Plc’s wireless venture in the Democratic Republic of Congo, two people with knowledge of the matter said.
MTN is part of a bidding process for Vodacom Congo SPRL, the company 51 percent owned by Vodacom Group Ltd., which in turn is controlled by Vodafone, the people said, declining to be identified because the matter is confidential. Johannesburg- based MTN made a presentation to Vodacom last week, one of the people said.
Vodacom has been in a dispute with the venture’s local partner Congolese Wireless Network SPRL over funding and operational structure since at least early 2010, following a $484 million capital injection into the business by Vodacom. Vodacom may sell its stake to end the dispute, Chief Executive Officer Pieter Uys said on May. 16. Vodacom Congo had 4.2 million subscribers at the end of March.
“MTN may be well-suited to deal with that kind of issue due to its long exposure in Africa,” said Khulekani Dlamini, head of research at the Cape Town-based Afena Capital. “An acquisition in the DRC would be very good for MTN as it would fill a gaping hole in its operations in a market that is very big.”
MTN, which operates in 22 markets across Africa and the Middle East, including in Uganda and Rwanda neighboring Congo. Congo, with a population of 71.7 million according to CIA World Fact Book, has also attracted interest from France Telecom SA, that country’s largest phone operator. Earlier this month it agreed to buy a 49 percent stake in operator Congo China Telecom from the Congolese government, and is in talks to purchase the remainder of CCT, owned by China’s ZTE Corp.
Vodacom, also based in Johannesburg, is busy with a process being run by London’s NM Rothschild & Sons Ltd. to “explore options” for its Congo unit, spokesman Richard Boorman said in an e-mailed response to questions today. MTN “continues to search for value-enhancing opportunities everywhere,” spokesman Rich Mkhondo said in a text message.
MTN added 0.9 percent to 132.35 rand at the close of Johannesburg trading today, giving the company a market value of 249 billion rand ($31 billion). Vodacom rose 0.9 percent to 89.25 rand, valuing the company at 133 billion rand.
If MTN secures the asset from Vodacom, it would consolidate its grip on the African continent, said Chris Gilmour, an analyst with the Johannesburg-based Absa Investments, a unit of Absa Group Ltd.
“Vodacom is apparently convinced it must get out of the DRC, therefore the only thing that would need to be sorted out is the price,” Gilmour said by telephone.
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