The MTN slash Orascom talks

The MTN slash Orascom talks that could, or could not lead to a transaction is hotting up. The Algerian government is quitting on any deal already. The Reuters article Q&A-Orascom's Algerian troubles points out Algeria and Egypt were involved in a diplomatic row that erupted after minor violence during soccer World Cup qualifying matches last year between the Arab rivals.



Football. Is that really what it all boils down to? Algeria, the fact remains, Egypt did not qualify, that should be enough. MTN are one of the sponsors for the FIFA 2010 World Cup. Not a partner, that partner group is an exclusive crowd that includes Coca-Cola, Visa, Hyundai, Adidas, Emirates and Sony. That aside, if Orascom managed to appease the fellows over in Algeria that ultimately is the key asset in the region, if we are not talking about Pakistan and Bangladesh. But as the same article points out, Sawiris won't let go without a fight.



I think that the creaking debt that Orascom Telecom are straddled with are a factor in them wanting to get a deal done on some of their assets. Question is, what would MTN, or anyone pay for these assets. I spoke to a journalist yesterday and he said industry pundits are suggesting seven times EBIDTA. Wow. That seems huge. OK, if the same metrics for MTN were applied, EBIDTA at year end was 46.1 billion Rands. So seven times that equals let us call it 323 billion Rands. The company is currently valued at 199.5 billion Rands. So this suggests if the same metrics apply for MTN for anyone else wanting to buy it, they would have to pay a 61 percent premium to the closing price yesterday. I don't know anyone with a 43.6 billion Dollar cheque, do you?



Staying with MTN yesterday, there was a subscriber numbers update. For the first quarter this year. And they measure this versus the quarter before. I should suggest to them that they should measure them versus first quarter last year. ARPU's falling everywhere except locally. If that is a sign of a "mature" market then I will take it. Interested to see that the annualised rate of additions to the post paid numbers is set to increase by around 12 to 15 percent. Does not sound like a mature market to me. OK, but here goes: MTN Group recorded 123,580,000 subscribers at 31 March 2010. This is a 7% increase for the quarter from 116,025,000 subscribers recorded at 31 December 2009. As Byron pointed out, MTN have Nigeria and Iran as 58.6 million subscribers. The South African contribution is 16.4 million. Amazing numbers, worth a chat, we will check them out in detail.