3 reasons Why MTN acquisition of Visafone is bad business for Nigerians by Alade Adeko





It is no longer news that MTN acquired Visafone the
nation’s only surviving CDMA licence operator. The news
no doubt entrenches MTN as a market leader despite the
impasse between it and the Nigerian Communications
Commission (NCC) over the huge fine imposed by the
regulator for failing to deactivate subscribers with
incomplete registration details on its network.
MTN and its circle of stakeholders argue that the
acquisition is a plus for the Nigerian economy; On the
surface their argument looks good but do not be deceived;
isn’t it a Greek gift? A closer look will reveal that huge
dangers awaits workers, families, subscribers and the
nation both in the immediate and in the long run.
Lets take a dive at some of them
… job losses at Visafone


First on the chopping block was the sacking of over 2000
Visafone employees while unspecified number of
employees had been gradually phased out before the deal
was sealed. Although MTN quickly announced the recall of
some of the sacked staff in response to public outcry, the
fact remains that the recalled workers may be forced to
accept unfavorable remuneration and employment
conditions under MTN, or be eased out of the system over
time due to redundancy.
… making a bad situation worse
Naturally, most sacked employees in many public and
private enterprises that ended up in mergers and
acquisitions that have taken place in Nigeria are the worst
for it. For example, the bulk of former staff of defunct
national carrier, NITEL and its mobile arm, M-tel have not
yet received their compensations almost a decade after the
sale of the entities. Same applies to some former staff of
Nigerian Airways Authority over three decades after the
death of the national airline. What of those disengaged in
the wake of the unbundling of Power Holding Company of
Nigeria (PHCN)?


The spiral effect of retrenchment or unemployment is better
imagined in a fragile economy like Nigeria. High rate of
unemployment increases crime rate, decreases purchasing
power and increases poverty. The fall-out of MTN/Visafone
acquisition just affirms how company acquisitions push
productive Nigerians into the already saturated employment
market and its inherent adverse consequences.
… destroy smaller operators
The acquisition of Visafone grants the already dominant
operator, MTN an undue advantage to use the 800MHz
spectrum licence for enhanced data services which gives it
dominance in the data services market including the market
share owned by smaller data centric players like Smile,
Swift Networks and Intercellular amongst others. More
importantly, this situation will certainly put these less
financially buoyant and smaller operators including
NATCOMs who only recently acquired the assets of NITEL,
at risk unless they can afford the financial wherewithal to
match MTN.


In the absence of the financial capacity to compete
effectively, it is a matter of time that the smaller operators
would be out of business. For those that may remain in
operation, the cost of staying afloat would certainly be high
while the natural decision organisationsfavour in situation
like this is to lay off their staff or downsize.
Adeko is a public affairs and policy analyst

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