Surprise as MTN drops P3.3bn Mascom deal
MTN’s desertion of the bid came as a surprise as the group has a November date with the Botswana Public Officers Pension Fund (BPOPF) for arbitration in the battle.
Both sides had already lined up lawyers for the arbitration, in which the pension fund was challenging MTN’s decision to sell its 53% stake in Mascom to Econet. The BPOPF argues that a separate shareholder covenant with MTN gives the pension fund the right to make an offer for the stake under a forced sale arrangement.
MTN group chief financial officer, Ralph Mufita told investors yesterday morning that the pan-African mobile giant was throwing in the towel.
“Econet’s unsolicited offer to acquire our 53% stake in Mascom has been terminated following certain conditions of the sale not being met,” he said in a scheduled financial update in Johannesburg.
Mufita did not elaborate on whether MTN was still offering the stake up for sale, while BPOPF officials could not be reached to comment on the state of play.
The P3.3 billion deal hit the headlines in March after Econet, a Zimbabwean mobile mega-corp, announced it had reached terms with MTN to take up the Mascom stake. The deal would have increased Econet’s overall hold in Mascom to 60%.
While Econet and Mascom founder, Strive Masiyiwa buoyantly told a packed youth meeting in Gaborone in April that the deal was a fait accompli, Econet ran into trouble after BPOPF resisted the transaction citing the right of first refusal principle.
Pension fund insiders said the BPOPF was not only wary of the billionaire’s plans for Mascom but believed control of the country’s largest mobile telecomms provider should remain with Batswana who have built up its value over the last 21 years.
Later, lawyers retained by the pension fund reportedly advised that while the BPOPF did not have pre-emptive rights to block the Econet/MTN deal, it did have the right to pursue a forced sale of the shares MTN holds in Deci.
Deci is an investment vehicle which holds 60% of Mascom. BPOPF holds 67% of Deci and MTN the balance, with their relationship governed by a shareholders agreement.
MTN invested in Deci through Mobile Botswana Limited and the shareholders agreement allegedly states that if there is a change of ownership or control, the other shareholder, being BPOPF can initiate a forced sale.
BPOPF insiders yesterday told Mmegi the MTN decision had come out of the blue. “A date for arbitration had been set. This is news to us,” one insider said.
Mascom is comfortably the country’s largest mobile company, holding about 53% of the local mobile phone market’s estimated 3.18 million subscriptions in 2018.