CA demands answers on 'surprise' Mascom deal

The pension fund wants a piece of the action
The pension fund wants a piece of the action

The Competition Authority (CA) is asking Mascom hard questions after the regulator was apparently caught by surprise as MTN announced a US$300 million (P3.2bn) deal to sell its stake in the mobile giant.

The South African group has said it expects its planned transaction with Econet Wireless to be completed in three months time, pending regulatory approvals.

BusinessWeek is however authoritatively informed that the CA has written a letter to Mascom and to MTN demanding answers on the planned transaction. The Botswana Communications Regulatory Authority, meanwhile, is examining Sections 42 and 43 of its Act, which require licence holders to notify the regulator in writing of any change in ownership.

“The Authority may, where in its opinion the change in ownership of a licence which is held by a body corporate would be detrimental to the development of the telecommunications sector or would not facilitate the exercise of the Authority’s functions under this Act, revoke such licence,” the Act reads.

The developments come as the Mascom board is set for a special sitting where representatives of the Botswana Public Officers Pension Fund (BPOPF) are set to formally query the planned sale of MTN’s shares. The pension fund is Mascom’s second largest shareholder.

BPOPF, with assets worth P60 billion, is reportedly eager for a bigger stake in Mascom, even though it presently does not enjoy a “rigght of first refusal” clause with MTN. Right of first refusal would have required MTN to offer BPOPF the equity, before any external partners.

While Econet, under billionaire Strive Masiyiwa, is Mascom’s founder, the pension fund is reportedly arguing that Mascom’s current value has been built on Batswana over the years and any stake being sold must first be offered to locals.

“The regulators are trying to find out what’s going on because they are seeing this only in the news,” an insider close to the latest developments told BusinessWeek.

“The board chair is meeting management this week and is scheduled to call an emergency sitting of the board to discuss all these developments. “The BPOPF is likely to push for legal advice to be sought to see whether the transaction is not violating any local laws. ”

The pension fund’s secretariat had not responded to BusinessWeek’s questions by the time of going to press on Wednesday evening. Mascom chairperson, Ishmael Selebogo confirmed to BusinessWeek that a board meeting on the proposed MTN deal would be held soon.

“We have not yet met and there is no board resolution on the matter yet. I will call a meeting soon,” he said.

Mascom is comfortably the country’s largest mobile company, holding about 53% of the local mobile phone market’s estimated 3.18 million subscriptions in 2018.

By Press time, comment was not forthcoming from BOCRA and the Competition Authority.

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