MTN loses out in Saudi bid

ADSL South Africa (Broadband South Africa), 27 March 2007

MTN has lost its bid for Saudi Arabia’s third cellphone license.
 
Kuwait’s biggest cellphone operator, Mobile Telecommunications (MTC), ‘offered to pay $1.5 billion (R11 billion) more than anyone else, including MTN Group’ (MTN loses to Kuwaiti rival, March 26, 2007).
 
Has MTC paid too much?
 
We think they did because MTC’s shares fell just after the news was released.
 
How much has MTC offered in total?
 
They offered the equivalent of $6.1 billion or R44.73 billion.
 
To give you an idea of how much money we’re talking about: ‘Telkom paid $280 million or R2.1 billion for the 75% stake in Multi-links’ (Telkom enters Nigeria, ADSL South Africa, 27 March 2007).
 
In other words, while MTC and Telkom bid on separate things, and one can’t even start to make comparisons, it’s clear that R44.73 billion is not pocket money.
 
Why would MTC be willing to fork out billions for Saudi Arabia’s third cellphone license?
 
Untapped potential for growth.
 
‘Saudi Arabia, the world's largest oil exporter, is the Gulf's biggest economy, but has lower cellphone penetration than its neighbours’ (MTN loses to Kuwaiti rival, March 26, 2007).
 
In other words, the potential for growth backed by the biggest economy in the Gulf surely convinced MTC to fork out billions.
 
ADSL South Africa (Broadband South Africa) regrets that MTN lost out but we’re sure they won’t be crying for too long. The price was just too high.