Vodacom, MTN Said to Be Interested in Madagascar Acquisition

Vodacom Group Ltd. and MTN Group Ltd., South Africa’s largest wireless companies, have expressed interest in expanding into Madagascar by buying Telecom Malagasy SA, according to two people familiar with the matter.

The Johannesburg-based companies are interested in acquiring closely-held Telma, as the carrier is called, to diversify sources of revenue, said the people, who asked not to be identified because the discussions are private. Telma, based in the Madagascar capital of Antananarivo, is seeking a buyer, people familiar with the matter said in February. It is valued at about $500 million, one of the people said at the time.

South African wireless companies are looking at other African markets as consumers increasingly use more profitable data-enabled smartphones and as domestic voice service revenue declines. Vodacom, which is 65 percent owned by Vodafone Group Plc, is planning to expand into three additional countries by the end of the 2014, Chief Executive Officer Shameel Joosub said in an interview in May.

Telma competes with Bharti Airtel Ltd. and Orange SA in Madagascar and has more than 1.8 million mobile subscribers, according to a 2011 corporate review on its website. That’s about 30 percent of the market, the phone operator said.

“We explore investment opportunities on a regular basis,” Vodacom said in an e-mailed statement, declining to comment on specific companies or countries. In an e-mailed statement, MTN declined to comment on whether it’s interested in Telma. Calls to Telma’s offices went unanswered.

Wireless Pentration

Madagascar, located about 450 kilometers (280 miles) east of mainland Africa, has a population of more than 22 million. Its $10 billion economy is forecast to expand 2.6 percent this year, compared with 1.9 percent in 2012, according to the International Monetary Fund.

Madagascar had 38 wireless subscribers per 100 people in 2011, according to data compiled by Bloomberg. That compared with 99 in the fellow island nation of Mauritius and 127 in South Africa, the continent’s largest economy.

Madagascar, the world’s second-largest producer of vanilla and cloves, has been in political crisis since 2009 when Andry Rajoelina, a 39-year-old former nightclub DJ, seized power from President Marc Ravalomanana with the help of the Indian Ocean island nation’s army. The country is scheduled to hold elections on Aug. 23 and the African Union has threatened to impose sanctions on Rajoelina and two other presidential candidates, including Ravalomanana’s wife, unless they meet demands to withdraw from the race by today.

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