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

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.