Following the Nigerian Communications Commission’s ruling that the MTN’s intent to acquire Visafone should exclude the allocated spectrum, MTN is considering pulling out of the deal.
Africa’s biggest wireless carrier by sales was deciding whether acquiring the closely held company was worth it without the spectrum, said one of the people, who asked not to be identified as the deliberations were private. The deal valued Lagos-based Visafone at about $220m, according to both people.
MTN did not immediately respond on a request for comment.
The Nigerian Communications Commission ruled last week that taking control of the spectrum would increase MTN’s dominance in the country, its biggest market. MTN and competitors including Bharti Airtel’s local unit are seeking to expand their internet coverage in Nigeria as growth in voice services slows. MTN agreed to pay almost $59m for spectrum as part of a government auction in June.
The Nigerian Communications Commission ruled in favour of MTN’s purchase of Visafone in December, according to an agreement seen by Bloomberg and signed by the regulator’s legal head, Yetunde Akinloye.
S&P Global Ratings downgraded MTN to junk status on Friday to reflect increased risk in Nigeria, where the phone company agreed to pay a 330-billion naira fine earlier this year for missing a deadline to disconnect unregistered subscribers.
Last week, Nigerian legislators raised new allegations about the wireless carrier, accusing the company of illegally moving almost $14bn out of the country. MTN denied the claims.
MTN’s share price fell 0.8% to R116.53 in afternoon trade on the JSE on Monday, valuing the company at R215bn. The stock has declined 39% since the Nigeria fine was first reported a year ago, compared with a 2.8% gain at crosstown rival Vodacom.