MTN aims to become a major internet player by acquiring Verizon South Africa

26 June 2008

South African telecommunications major MTN is taking aggressive steps to expand its presence from the mobile phone sector to the field of Internet services by snapping up the local arm of US-based Verizon Communications. The country's second-largest mobile operator has entered into an agreement (subject to Competition Commission approval) to purchase 100 percent of Verizon South Africa for an undisclosed amount.

Market speculation places the value of the deal in the region of South African Rand (R) 1.4 billion. At the close of business yesterday, MTN's market capitalization was R227.57 billion, which would place the deal at 0.6 per cent of the company's cap. Neither company has confirmed the actual value.

MTN Group president and CEO Phuthuma Nhleko said the acquisition will enhance MTN's product offering to meet the diverse requirements of its customers.

''Verizon Business SA, with its strong track record of providing advanced communications and information technology solutions to enterprise and government customers, is a natural fit to enhance MTN's existing corporate offerings not only in SA, but across the region,'' he says.

Confirming the company's interest in becoming a premier Internet service provide (ISP), Tim Lowry, managing director of MTN South Africa, said after the announcement yesterday: ''The Business ISP market is dominated by Telkom and Internet Solutions. MTN has a small presence through MTN Network Solutions.''

''The deal will go through a clearance procedure, and within three to four months, we'll be able to confirm that we've completed this transaction,'' he added.