MTN is spending $348,9m to bump up its shareholding in MTN Nigeria by buying out some of the minority investors. It will pay $287,8m in cash and issue 6-million shares in the parent company to take an extra 6,98% in the Nigerian subsidiary, giving it an 81,87 percent share.

The move is the opposite of what was expected as MTN has spent two years talking about reducing its 75% stake in Nigeria to bring in more local partners. That has been cited as essential in a country where local partners can help to quell occasional protests from consumers and the government that the cost of calls are too high and that little of the money being generated has any benefit for local participants.

In 2004, MTN said that it might list its Nigerian subsidiary to introduce a broader range of Nigerian investors as its backers. The company said that the potential listing would raise more cash to expand its network coverage and would also counter criticisms that it was a foreigner extracting money from the local economy.

A listing was not the only possible route for increasing local ownership, MTN had said, and various other options were being explored to broaden the local shareholding.

Yesterday CEO Phuthuma Nhleko said buying out some of the minority shareholders would let them capitalise on part of their investment. He also implied that the move would not be permanent, and that the repurchased shares might be sold on to new investors later. The acquisition is part of a process that will facilitate a broader spectrum of Nigerians to participate in the performance of MTN Nigeria, he said.

MTN was still committed to bringing in a broader spectrum of Nigerians, and the acquisition should ultimately be part of that process, he said.

MTN Nigeria launched in 2001 and has become the country's leading operator with 9,6-million subscribers, and a network that covers 73% of the population. It generated a revenue of $1bn for the six months to June, and has almost as many subscribers as MTN has on its home turf of SA.

Minority shareholders selling shares in the business are Celtelecom Investments, Celtel Funded Shares, Universal Communications, SASPV, N-Cell, Hermitage Overseas Corporation, Mobile Communications Holding and Mobile Communications Invest.

They will sell 28-million shares for $12,424 each. MTN will fund the cash portion of the payment partly from existing available cash and partly by drawing on banking facilities. About $15m of the cash settlement will be used to off-set some loan accounts that the minority shareholders have with MTN, reducing the cash payment to $272,6m. Deutsche Bank was appointed to independently assess the deal, and has declared it fair and reasonable to existing MTN shareholders.

MTN's shares lost 30c to trade at R61,50 after the announcement, then recovered somewhat to trade at R61,75.