Airtel, Tigo merger in danger: gov’t wants stake in new entity

The Airtel, Tigo merger talks, which has been ongoing for about a year now, is in danger of being scuttled by government’s demand of a stake in the new entity to be created from the merger. According to sources close to the merger talks, the demand is one of the major factors that is holding back the National Communications Authority (NCA) from granting its approval to the deal which would create the second largest mobile network after MTN. Government’s demand is premised on a decade-old transaction when government sold 75 percent of its shares in Westel to MTC Group which operated Zain. Zain was later acquired by Airtel in 2010. Government has over the years, through the Ghana National Petroleum Corporation (GNPC), maintained a 25 percent stake in Airtel amidst accusations that it has not invested in the operations of the company as is required of all shareholders. The demand being made by government is said to be a condition that must be accepted by Airtel Ghana before the regulator will sanction the merger with Tigo, operated by Millicom Ghana. According to sources close to the two telcos, the demand by government is seen as a setback to the discussions with Airtel for instance, not too much enthused about the latest twist of events which has the potential of putting off prospective investors. The latest twist on the other hand could also lead to Tigo developing cold feet over merging with a company that is partially owned by government, a situation that could change the dynamics of how they envision the proposed entity. The regulator is also expected to withdraw the two spectra held by the two entities should the merger go through and provide the new entity with a new spectrum that will meet its operational requirements.

Merger talks According to the announcement made earlier this year, per the agreement, Airtel and Millicom, operators of Tigo, would have equal ownership and governance rights in the combined entity. It is estimated that the combined business would serve nearly 10 million customers, of which 5.6 million are data customers. The resultant network operator would cover more than 80 percent of Ghana’s population with high speed data, providing the widest 3G coverage across the country, and would have revenues close to US$300 million, making it one of the largest communications companies in the country. The combined business is expected to provide customers with a major boost in both rural and urban network coverage, translating into better voice quality, high speed data services and reinforced network stability and resilience. With the combined fibre footprint and increased number of data centres, enterprise customers – including both large corporations and SMEs’ are expected to have access to a diverse portfolio of solutions. Mobile Financial Services will also be enhanced with combined agent networks and platforms, the companies said. Source: B&FT | Ghana]]>