South Africa’s Vodacom seeks to acquire a majority stake in NITEL’s mobile subsidiary, Nigerian Mobile Telecommunications Limited (MTel), with an offer of $480 million. The cash offer has elicited a counter bid from Alheri Engineering Limited which had also formally expressed interest to take up controlling equity in MTel.

Sources close to the deal claim that the South African firm is eager to acquire at least 51 per cent of the equity stake in MTel by paying $250 million up front to the Federal Government for the 24 per cent not taken up by Transcorp when it bought NITEL last year. The balance of $230 million will be paid to Transcorp in two installments if it accepts to relinquish 18 per cent of its stake in MTel immediately with the option for Vodacom to acquire another 9 per cent from Transcorp within the next three years.

Vodacom, it was gathered, is also committed to injecting additional capital into the under performing Nigerian mobile firm along with technical expertise under a management contract.

Separately Alheri has made a request to Transcorp that it be given one week to conclude its due diligence on MTel. Once this is concluded, an official of the company disclosed that Alheri is prepared to match Vodacom’s bid to the last dollar. Alhaji Aliko Dangote, the company’s owner and chairman also recently disclosed that Alheri is prepared to inject $1 billion if it acquires the company, and that MTel’s network capacity will be complemented by the optical fibre network taken over by Alheri Engineering from the former National Electric Power Authority (NEPA), last year. Alheri was awarded a 3G licence by the Nigerian Communications Commission (NCC).

Vodacom is the second largest Pan-African cellular phone network in the continent with 21.5 million subscribers in South Africa , Tanzania , the Democratic Republic of Congo and Lesotho , and recently acquired a licence to operate in Mozambique . The company has made several failed attempts to enter into the prolific Nigerian market through bids for former Econet Wireless Nigeria Limited which it managed for a brief period before withdrawing from the country citing corporate governance issues after the Econet board had approved the payment of a brokerage fee to some investment firms.

Vodacom made a second attempt in 2005 to acquire Econet.