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Africa’s largest telecom service provider, MTN has released a statement that it is currently in negotiations with Orascom to buy a part or all of it.
The talks that MTN are having with Orascom’s parent company, Weather Investments SpA, may bear fruit for MTN. It may succeed in buying Orascom or at least certain businesses of Orascom. The South Africa based company and Orascom, both have confirmed that the negotiations are still in progress.
MTN is looking forward to expanding its already large hold over the middle-east and Africa. Major telecom companies of the world like Vodafone are seeking to expand their network in Africa. Also, renowned analysts say that Orascom is under a lot of pressure to cut down on its debts.
Orascom is believed to be in talks with MTN so as to sell them resources worth $ 10 billion. However, Algerian Finance Minister, Karim Djoudi, mentioned that he won’t permit MTN to take over the Algerian unit of Orascom.
In the stock market a few days back, MTN started at 106.78 rand and finished at 2.5% lower. Orascom had a pretty flat day in the market on the same day closing only 0.1% more than they started with at 7.57 pounds.
On the other hand, Orascom is looking at a lucrative deal with a European telecom company which has a position in the emerging markets and is a regional operator. Also, MTN requires an approval from the Algerian regulators for any sort of transaction to take place. The Algerian opposition is pretty strong. Karim Djoudi said very clearly that the Algerian government will rightfully obtain 51% of the shares if any kind of transaction takes place.
Orascom operates in a large number of countries like Bangladesh, Pakistan, North Korea, Egypt, Tunisia, Algeria, CAR, Zimbabwe and Namibia. Therefore, a simple merger i.e. MTN taking over all the units of Orascom would prove better than a difficult and compound deal.
