Even though both parties are yet to issue a formal statement, sources close to South Africa based MTN communications have confirmed that discussions between itself and Multichoice Africa are still on-going. MTN intends to acquire Multichoice Africa. Here is a summary of the progress made so far.

  • Talks between MTN and Multichoice have been ongoing since the last quarter of 2016. If both parties finalize negotiations by June, an official announcement will be made by June.
  • The critical factor that will determine the success or failure of the deal is Multichoice Nigeria. Ongoing negotiations mean MTN will pause spending on its digital broadcast license which it acquired for N34 billion in 2015.
  • Multi choice Nigeria is partly owned by a group of investors led by Dewunmi Ogunsanya (SAN).
  • Any potential acquisition of the parent company would mean the Nigerian investors would have to be bought out.
  • Should they decline, MTN will be unable to go ahead with the transaction. The Nigerian investors may also hold out for a significant premium.

What is in it for MTN?

MTN stands to gain massively if the deal pulls through. Bundled data and pay tv packages could give it access to millions of potential new customers, and cash flow it can use to expand its core telco business. Multichoice is a dominant player in the Nigerian Pay-tv space, so the company can afford to maximize profit in its pricing scheme. MTN can leverage on its economies of scale and wide network infrastructure to boost the subscription base of local DSTV subscribers. By offering a combination of cheap data and relying on the power of smart phones, data hungry consumers in Africa’s most populous nation can access content that they are already used to without having to pay extra. Today, subscribers to DSTV premium channels can access the same content online, via DSTV.

GSM companies in Nigeria also face a rather precarious future with revenue from voice calls and SMS falling by the day due to the steadily improving Voice over IP technology. Analysts believe the next logical step for Telco’s will be to go vertical to remain competitive in the future. For MTN, DSTV is right in line with their core strategy of matching content with data.

What’s in it for NASPERS?

For Naspers the parent company of Multichoice Africa, a sale would free up cash to face businesses that are in a growth phase. Cheaper data and increasing adoption of smart phones, has led to an increase in online viewing of content hitherto seen on TV. Naspers has also focused on a strategy of disposing of legacy businesses and replacing them with startups that could propel growth for the future. For example, its stake in Tencent a few years ago has made up massively as it is now worth about $107 billion. Naspers as a company is worth $89 billion.

Regulatory bottle neck

MTN may also face difficulty in getting approval for the deal from the Nigerian Communications Commission (NCC). The acquisition would make MTN the largest telecommunications and pay tv company in the country, laying ground for a monopoly and anti-competitive behavior. Bundled internet and pay tv subscriptions could lead to many consumers porting from other networks. The enlarged entity could decide to lower prices or even run at a loss to entice new consumers. Smaller operators like Etisalat Nigeria would be forced to follow suite or lose customers. The acquisition could also lead to job losses as staff with over lapping job functions would be let go.

What’s in it for consumers?

Deal book 300 x 250

The consumers win at the end of the day for several reasons. As technology improves, data will be cheaper making content more relevant. As Telco’s pivot towards acquiring content to retain their subscriber base, content price will fall. At some point soon, consumers will only need to buy a phone on a contract line to access voice, SMS, data and content. That’s hard to resist.

MTN group was founded in 1994. The company has operations in over 20 countries outside its home base of South Africa, and over 200 million subscribers. MTN Nigeria, was in 2016 fined $5 billion for failing to disconnect unregistered subscribers. After negotiations, the fine was reduced to $1.7 billion and the company promised to on the Nigerian Stock Exchange (NSE). Multichoice Africa is a wholly owned subsidiary of Naspers Media and was founded in 1986. The company has operations in over 50 countries and is present in the Indian Ocean islands, with over 4 million subscribers. The company owns the DSTV and Gotv pay tv packages.


Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com


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