SAN ANTONIO-SBC Communications Inc. said it will enter South Africa’s cellular communications market through an equity investment in MTN, one of the country’s two national cellular companies.
SBC plans to invest about $90 million in MTN. A portion of the amount will go to acquire a 15.5 percent stake in the company and the remainder will cover SBC’s share of a recapitalization plan. MTN said it will use the funds primarily to expand its nationwide cellular network and increase its marketing capacity.
Simultaneous with the investment, SBC entered a joint venture arrangement with New Africa Investments Ltd., a publicly listed South African company. NAIL is the parent company of Natel, an MTN partner. The venture will explore opportunities in South Africa and other southern African countries.
“We are pleased to become a part of an excellent ownership group, which includes some of the country’s most prominent companies and business people,” said James S. Kahan, SBC’s senior vice president of corporate development. “MTN began operations just over a year ago, and has quickly built a network serving more than 100,000 customers. Against the backdrop of continued political stability and rapid economic expansion we’re seeing in South Africa, we believe MTN’s growth prospects are excellent.”
MTN’s other shareholders include Cable and Wireless plc, Naftel, M-Cell, FABCOS, Union Co. and Transnet. The company is headquartered in Johannesburg and employs 300 people.