BusinessTop News

Real reason MTN acquired Visafone



By Olanrewaju Oyedeji

Zenith Bank founder, Mr Jim Ovia is an astute businessman and the MTN acquisition of Visafone was not forced, The Difference can authoritatively reveal.

Being a banker to several well-heeled companies, Ovia saw that the telecommunications companies were literarily minting money so he decided to play in their field hence Visaphone was born to compete in the Code Division Multiple Access (CDMA) area.

This was notwithstanding that the existing CDMA companies were struggling in the market.

Visafone was born at a time companies like Multilinks and other CDMA telecommunication companies were going extinct.

Somehow Nigerians preferred GSM to CDMA. What preserved Visafone in those tough times was probably because they were attached to Zenith Bank somewhat and people dealth with the company as if it was Zenith which had a good reputation in the banking sector. What more, CDMA can be operated from a mobile phone just like GSM. It also appeared that Visafone did something right with data services such that many Nigerians preferred to use their data on blackberry phones.

By 2015, Visafone was the only CDMA telephone company standing. MTN being a major business partner of Zenith Bank was however the first company that received an offer to buy off Visafone when the decision was finally taken to sell. It was an open secret that MTN’s data services was at best crappy so her management believed that acquiring Visafone would be a step in the right direction especially given its data coverage.

The two companies set up teams to take a deeper look into the viability of a take over of Visafone by MTN and after a series of meetings an agreement was reached between the two companies and so Visafone became a subsidiary of MTN.

However, one issue the negotiating teams may have glossed over may be the over bloated staff strength of Visafone. This came to about five thousand whereas MTN was managing to remain profitable with just over three thousand permanent workers, while consultants and contract staff filled the gap.

It was obvious that in the buying over of Visafone by MTN something had to give and when things started going rough with corporate concerns the first element that suffers is human capital. MTN demonstrated this when staff in several divisions of the company were laid off. In some instances, whole units were outsourced and in some cases MTN created shell companies like when she appeared to have sold off her towers to another company when what actually happened was that MTN created another company to manage the towers and serve even other telecommunications companies.

The management of the new company came from MTN whilst MTN staffers formed the nucleus of the new enterprise. The former Finance Executive Mr Andrew Bing, a South African who sits on the board of the company became the new Managing Director of the Tower Company.

With this, it was clear to any discerning observer that from the onset MTN would not absorb all the of Visafone given her bloated staff strength hence it was not surprising that the first casualty would be the staff and hence MTN announced that it would dismiss two thousand staff of Visafone in the first instance. The company’s decision was roundly condemned by Nigerians who balked at the idea of throwing several young Nigerians into the unemployment market. The condemnation was so vehement that MTN quickly withdrew the announcement sacking the Visafone staff.

MTN had to do this in order not to worsen her situation with the Nigerian subscribers who were already annoyed with the company over the SIM registration imbroglio. Now the question on every lip is when will the waiting game end. As for the staff of Visafone, they should see themselves as endangered species. Apparently the decision to sack them after the acquisition was known to their management who chose not to inform them but then if MTN can outsource whole units and also sack staff how will she find it difficult to do away with Visafone staff? Some of the very technical staff especially those who managed the data services of the company will however survive the putsch.


Davos: Osinbajo sells Nigeria’s reforms

Previous article

Who wants MTN dead?

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in Business