Millicom could be in MTN’s acquisition sights

Millicom has been identified as one potential acquisition target for MTN Group given the South Africa cellco has confirmed it is eyeing opportunities to expand in Asia having ruled out any more attempts to merge with an Indian partner.

MTN faced pressure from South African politicians to ensure that the company remains a majority South African owned company, which has made it difficult for the firm to expand overseas through share based mergers. It needs to pay cash, or seek deals where share based transactions do not substantively dilute the South African shareholders’ stake in the firm.

Currently, the South African government owns a 14 per cent stake in MTN through a state pension fund, and Millicom, which has operations in Latin America and across Africa is viewed as a good potential fit. Such a deal would cost around US$10 billion, which in turn would not overly dilute MTN’s US$40 billion market capitalisation.

MTN already has a US$4 billion cash pile.