South Africa’s MTN has a troubled history in acquisitions, but it may be on the trail again, looking for an operator in India.
The firm twice tried to merge with Indian leader Bharti Airtel, but talks failed in 2008 and 2009, partly because of political obstacles. Bharti then turned the tables by making a different deal in Africa, acquiring the sub-Saharan operations of Zain Group, and thus becoming a major competitor for MTN in some markets like Rwanda. Now the South African operator could go after Bharti in India and is reported to be evaluating opportunities there.
According to Bloomberg, MTN could look to revive another previous failed alliance, with Reliance Communications (merger talks broke down in 2008). India, with its very low ARPUs and regulatory scandals, has been less attractive to outward investors in recent years, but the advent of 3G, and then LTE, should improve the business case and value for the largest cellcos, such as RCom, even as consolidation beckons for the smaller players, and those without 3G spectrum.
MTN and Bharti Airtel are now the top two players in the African mobile market, accounting for 28% and 13% of revenues respectively in 2011, but with the Indian company gaining on its rival in market share. Other major operators are also expanding in Africa, notably Orange, Etisalat, Tigo and Vodafone’s Vodacom joint venture.
MTN Group expects to have 200m subscribers on its networks by the middle of the year, up from 197.4m as of the end of April. At that date, the group reported a 5.6% year-on-year revenue increase, though it was hit by weakening consumer demand in South Africa and high reductions in termination rates in Nigeria. There was good growth particularly in Iran, Ghana, Sudan and Uganda, and data/SMS now accounts for 18% of group revenues.