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Legal & Regulatory
May 3
2006
The MTN Group Limited (“MTN Group”) and Investcom LLC (“Investcom”)
announced a landmark deal to create the pre-eminent mobile operator in
the emerging markets of Africa and the Middle East. The companies have
reached agreement on a transaction through a recommended offer in which
the MTN Group will offer to acquire the entire issued share capital of
Investcom, which is listed in Dubai and London, for a total
consideration of US$5.526 billion (R33.5 billion*).
The transaction will build upon the
complementary strengths of each company to create a true leader in the
emerging market telecom arena. The enlarged group’s increased scale and
capabilities is expected to enhance long-term value for shareholders,
customers and employees, creating significant potential for growth.
The recommended offer, at US$3.85 per
share (translating into US$19.25 per Global Depositary Share (“GDS”))
will be an all cash offer, with shareholders also being given a cash and
share alternative. This represents a 27% premium to the closing price of
Investcom’s GDSs on 28 April 2006.
Investcom’s controlling shareholder, M1
Limited, which currently owns approximately 70.6% of the ordinary shares
of Investcom, has irrevocably undertaken to accept the cash and shares
alternative and would become a shareholder in the MTN Group. M1 Limited
has agreed to a lock up of 14 months on the MTN Group ordinary shares it
will receive in the offer.
The transaction will make the enlarged
group one of the world’s largest emerging market players in
telecommunications and the clear leader in Africa and the Middle East,
operating mobile networks in 21 countries, covering a population under
licence on a combined basis of approximately 488 million people and
serving in excess of 28 million subscribers.
The integration of Investcom’s
experienced personnel would also broaden the proven management capacity
within the enlarged group, facilitate knowledge transfer between the two
operations and enable the enlarged group to further develop its business
in the Middle East.
Says MTN Group Chief Executive Officer,
Mr Phuthuma Nhleko: “We are delighted with this transaction which
delivers the next stage in MTN Group’s emerging markets growth strategy.
The MTN Group and Investcom have a shared vision to be the leader in
developing markets and both companies have already shown excellent
progress individually in this regard.
“This well-considered partnership
entrenches our leadership in telecommunications in Africa and the Middle
East and will optimise value for our shareholders. It also substantially
enhances MTN’s growth prospects, securing a number of important new
markets for the MTN Group.”
Investcom CEO, Mr Azmi Mikati, added: “We
believe this transaction represents the ideal platform for Investcom to
realise its goal of being a leading emerging markets telecommunications
enterprise. We strongly believe that the combined group has a very
exciting future – one I am personally committed to. The proposed
transaction offers our shareholders the opportunity to participate in
the growth of the number one telecommunications group in the region,
with a complementary geography and a scale of assets second to none.”
The offer is subject to approval by MTN
shareholders and the fulfilment (or waiver) of certain pre-conditions
and conditions precedent.
Investcom, a leading international
provider of mobile telecommunications services with operations in
Africa, the Middle East and Europe, had approximately 4.9 million mobile
subscribers in Benin, Cyprus, Ghana, Guinea Bissau, Liberia, Sudan,
Syria and Yemen at 31 December 2005.
It has also recently been awarded GSM
licences to build and operate mobile networks in Afghanistan and Guinea
Republic, expanding its operations to 10
countries and boosting its combined population under license to
approximately 147 million.
There are no overlapping operations
between the two companies. The deal consolidates the MTN Group’s
increased interest in the Middle East; with presence in Iran, Syria,
Yemen and Afghanistan and management presence in Dubai, it confirms
MTN’s position as a leading regional consolidator.
For the year ended 31 December 2005,
Investcom had revenues of US$ 903 million and net income of US$ 196
million. Investcom’s mobile operations comprise the most significant
part of its business; having generated 93% of group consolidated gross
revenues in 2005. In addition, Investcom provides international carrier
services, principally through Mediterranean Network SAM in Monaco, in
the United Kingdom and telecommunications engineering and consulting
services.
Launched in 1994, the MTN Group is a
multinational telecommunications group operating in Africa and the
Middle East. The MTN Group is listed on South Africa’s JSE Limited under
the share code: “MTN”. As at 31 December 2005, the MTN Group recorded
more than 23 million subscribers across its operations in Africa. MTN
operates in 10 African countries – Botswana, Cameroon, Cote d’Ivoire,
Nigeria, Republic of Congo (Congo Brazzaville), Rwanda, South Africa,
Swaziland, Uganda and Zambia. Furthermore, the MTN Group will launch
commercial operations of its network in Iran in the third quarter of
2006.
* Exchange rate used: US$1: ZAR6.05
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