TNM courts trouble with investment prospects in ISP

By Gregory Gondwe, Blantyre, Malawi 

TNM, one of Malawi's two mobile telecommunication services providers, has courted trouble with its announcement of plans to invest in the provision of ‘generic’ Internet Service Provider (ISP) operations.

The company is already into mobile internet services, Virtual Private Networks (VPN) services and selling of mobile telephone handsets and now the c

ompany wants to start dealing in hardware, software and Internet solutions for business and home users throughout Malawi, particularly Internet services, VPN, Ewimax as well as software support services.

TNM wants to achieve this through the acquisition of Burco Electronic Systems Limited which is a local registered company that is in the business that TNM is targeting.

Now the Competition and Fair Trading Commission (CFTC) is inquiring into the proposed acquisition of by the mobile telephone services provider.

It all started this week with the announcement from TNM that it has initiated a process to investigate the opportunity to purchase the ISP Business and related assets from Burco Electronics Systems Limited subject to completion of applicable regulatory reviews and approvals.

“The new Universal License issued to TNM by Malawi Communications Regulatory Authority (MACRA) allows TNM to supply all possible telecommunication services to its customers,” argued TNM in the statement.

Insisting that the acquisition will enable them to establish and deliver a broad range of telecommunications services to their business customers, as well as providing enhanced services to Burco’s existing customers.

 “TNM aims to accelerate the growth of ISP services in Malawi which it currently provides to its customers through mobile devices with faster innovation, increased synergies, unified branding and marketing,” the statement said.

TNM then went on to say that by acquiring the existing infrastructure from Burco it will prevent duplication and thereby create the opportunity to lower the long term cost of services to customers.

 “As elsewhere in the world with the growth and development in the use of Data applications, TNM aims to become a high quality service provider in the Malawi business environment which supports businesses with affordable and high quality services,” says TNM.

The company disclosed that the transaction value will not be material in the context of its overall business.

“Our projected total expenditure on new infrastructure for 2014 is USD 25 million and the acquisition of the Burco assets will only represent a small portion of this investment,” it says without further elaboration.

Within the past week the Management of both companies had been in discussions to determine the possibility of a successful transaction.

TNM also announced that it had submitted the required application to the Competition and Fair Trading Commission (CFTC) and has informed MACRA and the Malawi Stock Exchange (MSE) of the developments.

On Tuesday this week, TNM issued a cautionary notice to their shareholders through the media signifying that a significant level of agreement had been achieved for the proposed transaction.

And in a statement issued on Wednesday, CFTC said it had received an application for authorisation of the acquisition from the MSE listed TNM.

CFTC clarified though that the proposed transaction will only involve the acquisition of Burco’s ISP business operations while the hardware and other related business operations will be retained.

The commission then announced that in accordance to the Competition and Fair Trading Act, it has launched investigations to assess the likely effect of the acquisition on competition in the relevant market.

The Commission says it is now seeking views and comments from third parties on developments and operation of this industry, particularly on what prospects are likely to emerge in the light of this transaction.

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