Malawi Stock Exchange (MSE)-listed telecommunications operator TNM plc's plan to acquire assets of Open Connect Limited (OCL) has drawn mixed reactions from analysts, with some highlighting potential efficiency gains and others cautioning about unclear benefits.
TNM's proposal is under review by the Competition and Fair Trading Commission (CFTC), which is assessing whether the deal could compromise competition in the sector.
In a statement, CFTC said it was seeking stakeholder input on the likely impact of the acquisition on competition in the telecommunication centre.
In an interview on Friday, capital market analyst and investor Benedict Nkhoma said the transaction's success will depend on valuation and integration costs.
"If the acquisition is approved under appropriate conditions and the economics are sound, it should strengthen TNM's long-term infrastructure base and support future growth in Malawi's rapidly expanding digital economy," he said.
Nkhoma added that shareholders should judge the deal by its ability to generate sustainable earnings and improve returns on invested capital.
He noted that CFTC's review is a safeguard against potential consumer harm through higher prices or reduced choice.
But Stockbrokers Malawi equity investment analyst Kondwani Makwakwa described the acquisition as strategic, saying it would strengthen TNM's control over critical infrastructure, enhance service quality and reduce long-term operating costs.
"The transaction is expected to improve operational efficiency and reinforce the company's long-term earnings outlook. The deal will likely strengthen investor confidence and provide long-term support for TNM's share price," he said.
On his part, investor Purity Chitalo called the move a standard growth strategy, noting that TNM's 2017 acquisition of Burco Limited delivered tangible benefits, including new WiFi clients and technical expertise.
"Acquiring Open Connect's fibre network would, therefore, expand TNM's infrastructure base, data capacity and enterprise/broadband offering at a time demand for fibre and wholesale data is rising. TNM has executed similar transactions before," he said.
But investment analyst Brian Kampanje said shareholders need more information, arguing the deal does not appear to deliver economies of scale.
"More information is required to assist the shareholders appreciate the rationale for such acquisition," he said.
In a statement, CFTC said it was seeking stakeholder input on the likely impact of the acquisition on competition in the telecommunication centre.
"The commission is assessing the impact on the Malawi's market of the proposed acquisition of assets belonging to OCL by TNM," reads the statement.
OCL operates a national fibre network, providing wholesale capacity to mobile operators.
The firm is 60 percent owned by South Africa's Harith General Partners through Pan African Infrastructure Development Fund. Other shareholders include Press Corporation plc with 22 percent, Old Mutual Malawi Limited with a 15 percent, the Malawi Government two percent and Nico Holdings plc one percent.
On the other hand, TNM plc is 43.72 percent owned by PCL, 23.57 percent by Old Mutual Life Assurance Company Limited, 8.16 percent by Nico Life Insurance Company with the public owning 24.55 percent.