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How MTN’s acquisition of Visafone was struck

By Adeyemi Adepetun   |   17 October 2016   |   4:33 am


Details of MTN Nigeria’s acquisition of Visafone have shown that the Code Division Multiple Access (CDMA) operator asked the South African telecommunications firm to take only 100 per cent shareholding at the initial stage of the deal.

The Guardian yesterday sighted a letter written to Visafone by the Nigerian Communications Commission (NCC) entitled, “Re: Final Approval To The Changes in Shareholding of Visafone Communications Limited.”

The letter dated July 13, 2015 showed that Visafone Communications Limited, a holder of a Unified Access Services Licence, requested the approval of the NCC to enable MTN acquire its 100 per cent equity, by virtue of share transfer arrangement.

NCC said it reviewed the request, and on October 5, 2015 granted an approval-in-principle to Visafone for the proposed transaction subject to its (Visafone) meeting conditions specified in the letter. And upon confirmation of compliance with the conditions, NCC granted final approval for the acquisition of 100 per cent equity in Visafone by MTN.

But later, in another application and a letter written by Visafone and dated June 9, 2016 and July 11, 2016, it requested the NCC to approve a transfer of its licence to MTN. In response to the letter with the title, “Re: Request for Approval To Transfer Visafone’s Licences to MTN Following Transfer of Ownership,’ the commission gave conditions for approval which include that:

• Visafone subscribers can be migrated to MTN’s network, but that such customers need to be segregated until it takes on the application for transfer; and that

• MTN’s tariff shall apply to all MTN and Visafone subscribers that are migrated.

Other conditions are that separate accounts shall be maintained by MTN and Visafone, MTN shall bear the cost of devices needed by Visafone’s subscribers accommodated on MTN’s network, and that Visafone’s subscribers, who still have airtime on their devices, should be credited.

The NCC also approved that where a subscriber previously owned an MTN SIM card and elects to retain the said card, the airtime subsisting on Visafone’s platform should be transferred, and where a new SIM card has to be purchased, a refund of airtime shall be made. Any Visafone subscriber that declines the above mentioned offer shall wait until Visafone rolls out its LTE network and be accommodated thereon.

MTN had earlier in the year completed the Visafone deal after committing about N47.5 billion ($238,498,957). It subsequently reported that it successfully migrated about 568,000 hitherto customers of Visafone to its GSM platform.

The NCC had last week, through its Director of Public Affairs, Tony Ojobo, stated that it only approved shareholding capacity of MTN in Visafone and not the CDMA operator’s licence.

The Executive Vice Chairman of the commission, Prof. Umar Danbatta, had also said that the need to avoid the prospect of one ‘dominant operator’ in the sector, having the power to control others because of the resources at its disposal, was also put into consideration in not approving MTN ownership of Visafone’s licence.

Danbatta said the licence acquisition would be put to public forum at the appropriate time soonest.

Visafone holds a block of 800Mhz spectrum which it uses for its CDMA- based network, and which MTN, apart from its 2.6GHz spectrum which it won early in the year, hoped to complement its Long Term Evolution (LTE) offering in Nigeria.

Earlier this year, Etisalat, which also at the weekend in Lagos unveiled its 4G/LTE offering, had filed a suit to block the takeover of Visafone by MTN on grounds.

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