3 Reasons why MTN’s Acquisition of Visafone is bad business for Nigerians By AladeAdeko | Welcome to Linda Ikeji's Blog

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Saturday, 20 February 2016

3 Reasons why MTN’s Acquisition of Visafone is bad business for Nigerians By AladeAdeko

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 

23 comments:

Eddy Ogbunambala said...

Hmmm

Eric Nesty aka LIB'S FINEST said...

Okay...


#FINEST

Dominic Okeke said...

Well visafone needed the money so they sold.......didn't they visualize these things?

pompom said...

So what should we do Mr Adeko

Anonymous said...

Adeko u know nothing

ProudlyDeltan15 said...

Seen....ProudlyDeltan

Jamila Shaibu said...

Hmmmmmmmmmm issorite!

aralucnful said...

I am not sure it is a bad idea that mtn bought over visafone except the sale was not transparent nor it did not follow due procedure.

People are usually pushed into better lives when things like this happen.

I see it from the positive angle that data services will.be better and may we may now have data services without expiry date as we do voice call now.

When they grow the business, mtn will employ more people just like what happened in banks.

Yes people will loose their jobs but those that will suffer shall be those that stunted theie self improvement and development as no one that developed his or hee skill shall suffer as there will always be places where they are needed.

The problem we habe are undeployed people and not unemployment. People need to develop their skills and deploy it to places they are needed.

When institutions grow big they are always better off in the terms you listed above setring aside the short term effects you mentioned.

Anonymous said...

Why would the NCC allow such a deal? This is definitely a deal that should be overturned by the courts for antitrust issues. It's only in Nigeria that this kind of thing will be allowed to happen. Definitely a corrupt process, the NCC and all parties involved in this deal should be investigated.
Also, has MTN paid their debt? Hope they will not use their new found power to transfer the bill to the masses...

Anonymous said...

Very shallow article. Acquisitions and restructuring are part of business life. The writer should have told us if the acquisition violated Nigeria's anti-competitive laws, that is if Nigeria has any

Ogbukwa Blessing said...

Their own business palava

Anonymous said...

Guy, your examples of merged companies are former govt parastatals. This is a private deal, so it cannot be the same.
Again, Visafone was about to die anyway, so it makes sense to sell to an interested buyer. If MTN didnt buy, etisalat or glo would have happily bought it to also compete against SMILe and the rest, so your talk doesn't make sense... Get real, this is business!

Companies like FCMB, Shell, Chevron that are doing well are still sacking staff, so what rubbish is he talking about? MTN recalled the staff and wants to improve its data business(which is terrible) so why are you beefing them?

Your article is just sponsored bullshit and seeing that Etisalat just sued MTN over this deal, we can guess who paid you.

Anonymous said...

Abeg. Sponsored post jare...

Ogbewe Godfrey said...

Nigeria is a fail state. by selling ur right to ntm. Can they try that in south Africa

Tope said...

You don't deserve whatever amount you were paid for this write up...such a shoddy job.

Remi Abioye said...

What else do you expect in a capitalist economy? They encourage monopolies to weaken the masses and enrich the wealthy. God save Nigeria.

WUXI KORER STAINLESS said...

I am a visafone user and since the buy over, I can confirm to you that the data service now has a bad network and the internet speed is kinda slow now..I really dont advise the buy over because MTN seems complacent and are not that capable when it come to data, I am very sorry to other users who dont have options for other network...I am immediately porting to Spectranet who will give me my data demands and speed...I really hope MTN will take this Visafone buy over a real business deal instead of letting it die like Starcomms and Multilinks which I was also a victim of it bought over.....Please let pray for MTN to be able to carry on with the mantle..

WUXI KORER STAINLESS said...

I am a visafone user and since the buy over, I can confirm to you that the data service now has a bad network and the internet speed is kinda slow now..I really dont advise the buy over because MTN seems complacent and are not that capable when it come to data, I am very sorry to other users who dont have options for other network...I am immediately porting to Spectranet who will give me my data demands and speed...I really hope MTN will take this Visafone buy over a real business deal instead of letting it die like Starcomms and Multilinks which I was also a victim of it bought over.....Please let pray for MTN to be able to carry on with the mantle..

WUXI KORER STAINLESS said...

I am a visafone user and since the buy over, I can confirm to you that the data service now has a bad network and the internet speed is kinda slow now..I really dont advise the buy over because MTN seems complacent and are not that capable when it come to data, I am very sorry to other users who dont have options for other network...I am immediately porting to Spectranet who will give me my data demands and speed...I really hope MTN will take this Visafone buy over a real business deal instead of letting it die like Starcomms and Multilinks which I was also a victim of it bought over.....Please let pray for MTN to be able to carry on with the mantle..

WUXI KORER STAINLESS said...

I am a visafone user and since the buy over, I can confirm to you that the data service now has a bad network and the internet speed is kinda slow now..I really dont advise the buy over because MTN seems complacent and are not that capable when it come to data, I am very sorry to other users who dont have options for other network...I am immediately porting to Spectranet who will give me my data demands and speed...I really hope MTN will take this Visafone buy over a real business deal instead of letting it die like Starcomms and Multilinks which I was also a victim of it bought over.....Please let pray for MTN to be able to carry on with the mantle..

Oluwatosin Ayeni said...

Issues everywhere

obi chibuikem said...

MTN needs to leave this country. We are cool with Glo! They lut us

Anonymous said...


Same here I usually enjoy Visafone data service but since the take over from MTN it is not to write home about. MTN take over if Visafone bad news from me and other visafone subscriber.

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