MTN in interesting deal with American player, Millicom

Africa’s telecoms giant MTN Group has embarked on an extraordinary step that aims to harvest a self-created market across the African continent. The mobile phone network operator announced a partnership which will see it venture into internet based business support and development initiative called Africa Internet Holding (AIH).

MTN has partnered with globalised internet business incubator Rocket Internet and integrated digital business Millicom International Cellular to join AIH. At the risk of running ahead of ourselves, we ( take a view that this partnership is worth watching as it has the potential of developing into something else.

The three partners will each hold 33.3% of AIH. The investment is subject to regulatory approval, and the transaction is expected to close during the second quarter of 2014.

Commenting about the partnership MTN Group CEO Sifiso Dabengwa said “We are excited to engage in a strategic partnership with Rocket Internet and Millicom to develop online ventures across the fast growing internet markets of Africa. Rocket Internet’s proven successful track record, coupled with Millicom and MTN’s leading mobile telecommunications position, will allow the partnership to capture the growth potential of the digital media space across our footprint in the region”.

The initiative comes a week after MTN revamped its positioning for the African enterprise telecoms market. The enterprise market is becoming a focus area as the consumer market, mainly voice, moves closer to saturation in a number of certain key markets.

The AIH initiative may mean that MTN is investing into future customers. It can also be seen as a small step upstream.

Dabengwa said “MTN will continue to pursue digital business adjacencies as one of its key strategic priorities to drive growth and value to our customers across Africa.”

The potential of this initiative is best reflected in the names of high profiled ventures that have come out of Rocket Internet incubation. Names that have emerged in the past 18 months include Jumia, Zando, Kaymu, Jovago, Lamudi, Carmudi, Easytaxi and Hellofood.

AIH is itself a fresh establishment which was launched in 2012 as a JV between Rocket Internet and Millicom International Cellular. AIH is described as a leading internet group with presence in 13 African countries, including South Africa, Nigeria, Egypt, Morocco, Cote d’Ivoire and Ghana.

Millicom CEO, Hans-Holger Albrecht, said “We are pleased to welcome MTN as a strategic partner to accelerate the growth of our online alliance in Africa. It is a significant vote of confidence in its future.”

Albrecht added that “Between us we have more than 220 million mobile customers in the continent with very limited overlap. MTN is the leader in Nigeria and South Africa, the largest markets for AIH currently, while Millicom contributes through its leading positions in our markets, combined with one of the most innovative product offerings.”

Millicom is interesting as an MTN partner. The company has achieved a respectable level of digital integration that continues to elude many across the globe. With a market focus in Latin and Central America and Africa, Millicom started as a mobile network player and expanded into cable television service thus standing a chance to integrate mobile telecoms with rich media content.

Millicom latest annual report says the company offers mobile services to 47 million people in 13 markets in Central America, South America and Africa under the Tigo brand. These services consist of traditional voice and SMS products and increasingly of mobile data and other value added services (VAS).” The countries of operations are El Salvador, Guatemala, Costa Rica, Nicaragua and Honduras in Central America. There is Bolivia, Colombia and Paraguay in South America and Chad, the Democratic Republic of Congo (DRC), Ghana, Mauritius, Rwanda, Senegal and Tanzania in Africa. It is the little overlap with MTN that makes this space interesting.

MTN said the investment in AIH is in line with its strategy of bringing the digital world to customers, adapting to their rapidly changing needs and delivering a consistent end-to-end user experience.

Oliver Samwer, Co-Founder of Rocket Internet, said “The strategic partnership between Rocket Internet, Millicom and MTN is unique and will enable AIH to reach more consumers with better services. We feel very strong about AIH’s existing and future ventures in Africa and look forward to working with our new partner,” said.

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