Different reports at the weekend indicated that Vodacom Group Limited (Vodacom) and MTN Group are quietly competing in the race acquire Visafone, the only surviving Code Division Multiple Access (CDMA) operator in Nigeria.
Some people with knowledge of the matter said that talks are at an advanced stage, and a deal may be imminent but the potential purchase price and other details couldn’t be learned
Nigeria CommunicationsWeek gathered that the renewed interest by Vodacom to play in Nigeria’s telecommunications sector and Visafone is based on the exponential growth in the demand for data in the country.
Vodacom feels that CDMA technology which is suited for data service and coup with the fact that it is part owner of some undersea cable infrastructure that lands in Nigeria which includes SAT-3, WACS among others as well as its strong financial standing, it will be able to face competition especially in the data space of the telecom market.
Mr. Srinivasa Venkatappa, chief executive officer, Visafone told Nigeria CommunicationsWeek through Francis Enyogai his personal assistant that he does not know anything about such discussion and that if it happens, the company will communicate to the public through its communication channel.
Efforts made to reach Guy Clark, managing director Vodacom Business Nigeria, a subsidiary of Vodacom and other principal officers of the Company proof abortive as they travelled to South Africa for the company’s annual convention.
It would be recalled that Vodacom’s interest in Visafone is its second attempt; the first was when it bought into Econet now Airtel Nigeria and later pulled out as a result of what it described as corporate governance issues.
Visafone was born out of the strategic acquisition of 3 CDMA mobile network operators that had been in operation for up to 8 years with 30,000 subscribers and coverage in different parts of Nigeria.
The company, which was incorporated in Nigeria on June 20, 2007 following the acquisition of Cellcom received its Unified Access Service Licence as a telecom operator from the Nigerian Communications Commission (NCC) on August 1, 2007 positioned it to offer mobile, fixed and any other telecommunications service to its subscribers.
On the other hand, from its roots in South Africa, Vodacom has grown its operations to include networks in Tanzania, the Democratic Republic of Congo, Mozambique, and Lesotho and provides business services to customers in over 40 African countries such as Nigeria, Zambia, Angola, Kenya, Ghana, Cote d’Ivoire, and Cameroon.
It was owned on a 50:50 basis by the South African telecommunications group Telkom and the British mobile phone operator Vodafone.
Elsewhere, MTN Group, Africa’s largest telecoms operator was also reportedly in talks to buy Visafone Communications to solidify its grip in the South African firm’s most important market, sources familiar with the discussions said on Friday.
The report by Reuters claimed that wireless-network operator Visafone was set up eight years ago to deliver voice and broadband services through mobile and fixed telecom platforms after business tycoon Jim Ovia, who also founded Zenith Bank, acquired three operators.
“The deal is done. We’re almost putting ink to paper,” a source close to the deal said.
Another source said the talks would conclude “very soon”.
Both sources did not say how much MTN would spend on the purchase and how big a stake in Visafone it would take up.
Visafone grew its subscriber base from 30,000 after the acquisitions in 2007, to 2.2 million at the end of 2014, data from the telecom’s regulator showed.
But fixed wireless operators with CDMA technology platforms most suited for broadband and data services have faced stiff competition from more established rivals such as India’s Bharti Airtel, Dubai-based Etisalat and MTN, hitting the industry’s average revenue per user (ARPU).
ARPU, a key gauge of telecoms firms’ competitiveness as well as of consumer spending trends, has declined over the past three years to $5 from $8 as competition deepens.
MTN had nearly 60 million users in Nigeria in 2014, about 27 percent of its entire subscriber base across 22 countries.
Africa’s most populous country is also the biggest contributor to MTN’s revenue, providing more than a third of overall turnover.