Phone
MTNs the front-runner among several suitors in talks to acquire control of Congo-Chine Telecom SARL, Kang Linghua, a spokesman at the venture, said in an interview in Kinshasa yesterday. Negotiations to sell the countrys third-largest wireless operator, valued at about $400 million, may stretch beyond this year because of the financial crisis, he said. MTN declined to confirm or deny the discussions.
A purchase would allow Johannesburg-based MTN to expand into a market thats forecast to add 25 million subscribers over five years as 85 percent of people there still have no mobile phones. For ZTE, exiting the venture would help the Chinese company focus on its main business of selling equipment and handsets in a region where sales surged 70 percent last year.
“The DRC has huge potential for growth in mobile phones,” said Michele Scanlon, principal consultant at Green Giraffe, a Cape Town-based telecommunications research company. “MTN would be able to bring their marketing and commercial skills into the market and a significant investment budget. For ZTE, it had been an incubation project.”
MTN cannot comment on any specific deal and the company continues to pursue “value-enhancing” opportunities, it said in an e-mail. Margrete Ma, a Shenzhen-based spokeswoman at ZTE, Chinas second-largest maker of phone-network equipment, declined to comment.
High-Growth Markets
Moroccos Maroc Telecom has also held talks about a possible purchase, Kang said. Maroc spokesman Ali Jouahri declined to comment.
Congo-Chine, established in 2000 between ZTE and the Congo government and launched in 2002, has 13 percent of the nations mobile-phone market after South Africas Vodacom Group Ltd. and Kuwait-based Zain, Kang said.
The Democratic Republic of Congo will be among the fastest- growing markets in the region in the next five years, Goldman Sachs Group Inc. said in a March 20 report. The countrys percentage of people owning mobile phones may rise to 47 percent in 2013 from 15 percent last year, while the regions wireless penetration will increase to 88 percent from 48 percent, according to the report.
Network-Equipment Maker
ZTE, based in Shenzhen, south China, last week reported profit rose 39 percent to 1.66 billion yuan ($243 million) last year, helped by a 34 percent increase in overseas sales. The company, which supplies network equipment to customers including Ethiopian Telecommunications Corp., said revenue from Africa jumped 70 percent to 9.3 billion yuan in 2008. ZTE doesnt specify contributions from Congo-Chine.
MTNs profit last year climbed 44 percent to 15.3 billion rand ($1.6 billion) after its operations in Iran and Nigeria helped the companys number of subscribers increase 48 percent to 90.7 million. Earnings before interest, taxes, depreciation and amortization — a measure of a companys inflow of cash — will jump to $7.67 billion by 2013 from $5.22 billion last year, according to Goldman estimates.
ZTEs stake in Congo-Chine may prevent the Chinese parent from winning equipment orders from other local phone operators, “which is bad for business,” Kang said.
Last year, MTN failed to close two deals with Indian companies. Talks with Reliance Communications Ltd., Indias second-largest mobile-phone operator, ended without an agreement because of “legal and regulatory issues,” and talks with Bharti Airtel Ltd. ended because agreement on management and ownership structures couldnt be reached.