MTN set to buy Egypt's Orascom

MTN confirmed on Wednesday that it is in talks to buy Egypt's Orascom Telecom, confirming that the failure of merger talks with India's Bharti Airtel has in any way not affected the South African telephony provider's appetite for foreign partnerships.

The deal, valued at a estimated $9 billion deal, could include Algeria's top mobile phone firm, extending MTN's reach beyond its core markets.

Purchasing all of Orascom, which has a market capitalisation of $7.2 billion and almost 93 million subscribers, would give Africa's biggest mobile operator access to fast-growing markets in Algeria, Pakistan and untapped North Korea.

Egyptian investment bank EFG-Hermes has valued Orascom at about $9 billion. The deal would make MTN, which relies on South Africa, Nigeria and Iran for the bulk of its revenue, the world's fourth-largest mobile phone operator. Currently, it ranks as the world's eleventh, with 116 million subscribers.

MTN said talks with Weather Investments, which owns 51 per cent of Orascom Telecom may or may not lead to a transaction. Weather Investments is majority-owned by Egyptian tycoon and Orascom executive Naguib Sawiris.

Djezzy is Algeria's largest mobile phone operator and Orascom's biggest source of revenue but the company has been involved in a tax dispute with Algerian authorities.

The acquisition of the whole of Orascom, however, would propel MTN past its former suitor and current rival, India's Bharti Airtel. Like MTN, Bharti has been keen to capitalise on African growth and recently sealed a $9 billion for the African assets of Kuwait's Zain.

MTN declined to comment further with regard to its announcement. But analysts believe a share swap could be on the cards, citing the involvement of parent Weather Investments. Weather also owns mobile phone operations in Greece and Italy.