May 25, 2009 / 2:30 PM / 10 years ago

NEWSMAKER-MTN's Nhleko, a shrewd dealmaker

By Gugulakhe Lourie

JOHANNESBURG, May 25 (Reuters) - Phuthuma Nhleko, chief executive of South Africa’s MTN (MTNJ.J), is one of the country’s best-known black businessmen and a consumate dealmaker who has grown the mobile phone group into Africa’s biggest.

MTN and Indian mobile operator Bharti Airtel (BRTI.BO) said on Monday they had restarted talks to create an emerging markets telecoms giant with combined revenue of $20 billion. [nLP34850]

Nhleko, a U.S.-educated civil engineer turned corporate financier and MTN’s CEO since 2002, has been instrumental in growing the company into a group with more than 100 million subscribers and operations in 21 countries in Africa and the Middle East.

A successful deal between MTN and Bharti would create the world’s third-biggest wireless group, with more than 200 million subscribers.

Bharti (BRTI.BO) said the potential value of a complex deal in which the firms pay cash and stock for stakes in each other, was more than $23 billion.

Talks were at an early stage and analysts said among the issues that will have to be addressed were management, and the companies’ influence on each other.

Previous merger talks collapsed a year ago when the South African group proposed a new structure that would have seen Bharti become an MTN unit. MTN also held talks with Bharti rival Reliance Communications (RLCM.BO) last year, but those failed.

If MTN and Bharti do eventually merge, analysts believe Nhleko would want to run the combined business.

“It could transpire that (Nhleko) could head up this new entity,” said Richard Hurst, a telecoms analyst at advisory firm IDC, adding that Nhleko was extremely experienced and has done well with the company across Africa and in some parts of the Middle East.

“But we are not sure who is waiting in the wings at Bharti,” Hurst said.

LEADERSHIP RIVALRY

Another analyst said the current proposed transaction avoids leadership rivalry, but if the two companies merge in the future this may raise leadership issues.

MTN, with a $28.5 billion market capitalisation, operates in countries in east, central and west Africa such as Nigeria, Cameroon, Ghana, Zambia and Uganda. Under Nhleko, it has also pushed into Iran, Yemen, Syria and Afghanistan, as well as Cyprus. If Bharti Airtel is prepared to pay a premium to buy a stake in MTN, Nhleko and his top five management team stand to make a bundle.

Nhleko and four other executive directors own 26 percent of Newshelf 664 — a management and staff-owned vehicle — which in turn owns 13.09 percent of MTN.

MTN valued the Newshelf stake at 24.4 billion rand. MTN is planning to buy the Newshelf shares for a nominal value and settle outstanding funding obligations, before offering shares to the black public and its own black staff, the company said in December 2008

Nhleko is an astute dealmaker, and spearheaded MTN’s acquisition of Investcom in 2006 — one of 15 biggest M&A deals in South Africa since 1991.

He has been instrumental in transforming MTN from the second-largest mobile group in South Africa into sub-Saharan Africa’s top player, while the acquisition of Investcom brought a substantial presence in the Middle East.

Despite all the international growth, however, MTN remains number two in its home country, where Vodacom (VOD.L)(TKGJ.J) has more subscribers.

Before joining MTN, soft-spoken and media-shy Nhleko was a chief executive of Worldwide Africa Investment — in which he is still a majority shareholder.

He established Worldwide Africa Investments after a stint in corporate finance at Standard Bank (SBKJ.J), where he sharpened his dealmaking skills.

Away from deals, Nhleko relaxes by reading and listening to avant garde jazz. He holds an MBA from Atlanta University and a civil engineering degree from Ohio State University.

(Writing by Marius Bosch; Editing by Rupert Winchester)

((gugu.lourie@thomsonreuters.com; +27 11 775 3162; Reuters Messaging: gugu.lourie.reuters.com@reuters.net))

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