The FT is reporting that MTN is in talks with Orascom to buy their African assets

The FT is reporting that MTN is in talks with Orascom to buy their African assets. Oh darn, I was hoping the whole lot, because Orascom of course operates a network in North Korea. Yip. And that would bring MTN closer to operating across the entire George W Bush Axis of Evil. Believe it or not, but I looked at the Orascom financial release for the end of the last financial year and see that North Korean subscribers have ARPU's of 40 Dollars. Only 100 thousand odd users, Kim Jong-il and his closest potential adversaries mates.



Who are Orascom though? Well, they are an Egyptian based company controlled by the Sawiris family. Very wealthy Egyptian family. Very wealthy. Why would they be sellers? I can understand why MTN would want these assets, it would give them wider coverage across Africa and access to that key North African region, but the Orascom outfit is straddled with an enormous amount of debt. That would be their biggest problem. Wait, sounding all too familiar here. Sounds like Zain, that is it.



Paul was written a piece for the WSJ, check it out, if he gets a quote there we will celebrate with an extra shot of espresso:


As you can see form the share price moves in the last few days, the initial reaction is negative, probably on worries that MTN will overpay for assets that it may acquire from Orascom.



Some days it feels like we are the only resolute MTN bulls left in South Africa!



We would be very positive about additional North African licence footprint. Egypt has nearly 80 million people, and Algeria has 35 million people. Mobile penetration in those markets has risen sharply, and Egypt has more upside at around 60% penetration than Algeria which has 80%.



MTN has demonstrated its ability to maintain very solid Ebitda margins in these developing markets, through judicious capital spending on network infrastructure and effective sales, marketing and pricing strategies.




Even in the more mature markets, ARPUs in Africa are low, and we feel that rising incomes and increased adoption of smartphones will drive much higher average user activity in the years to come. We believe that MTN will demonstrate the ability to generate stronger cashflows and higher earnings than the average investor expects. With this in mind, we would be happy to see MTN acquire more mobile "real –estate" in these under-appreciated markets.