After Mahatma, it's Bharti-MTN deal for India, SA: Economist- Telecom-News By Industry-News-The Economic TimesAfter Mahatma, it's Bharti-MTN deal for India, SA: Economist
LONDON: Telecom giant Bharti Airtel's acquisition of MTN in South Africa, if successful, would be the biggest thing to happen to the two
countries since Mahatma Gandhi, says international business magazine Economist.
"It would be the biggest thing to pass between India and South Africa since Mahatma Gandhi moved from one country to the other," Economist said in a report on its website.
Earlier this week, Bharti Airtel and MTN said separately that the two firms have initiated "exploratory discussions" for a possible buyout of the South African mobile player. If successful, the deal could catapult Bharti among the world's five biggest mobile operators.
While Bharti has denied having made any bid so far, saying the talks are only exploratory as yet, a report in the British daily Financial Times said yesterday that the Indian firm has put in an indicative bid worth about 19 billion dollars for a controlling 51 per cent stake in Africa's largest mobile phone operator.
"That would make it the heftiest overseas acquisition ever made by an Indian firm, more than Tata Steel paid for Corus, a British steelmaker, and seven times the amount India invested in the whole of Africa over the ten years to 2004," Economist report said.
"The deal would unite the leading companies in the world's two most promising mobile markets. In neither market have penetration rates yet exceeded a third of the population. India is adding more subscribers per month than any other country," it added.
The report quoted figures from research firm Gartner as saying that in Africa, subscriptions are projected to grow by 11 per cent a year until 2011.
MTN has a bigger subscriber base than Bharti, a broader geographic reach, stronger revenues and higher profit, the report said, adding that Bharti, however, has a bigger market capitalisation but the gap has narrowed after the shares of Indian firm fell and that of African company rose amid the reports about the bid, the report noted.
"These numbers do not daunt Bharti, which has the confidence and clout of a company that has taken full part in an economic miracle. India added over 10 million mobile-phone subscribers in March alone, taking it past America, by some estimates, to become the second-biggest mobile market in the world," Economist said.
"Flush with this domestic success, Bharti has for years been harbouring international ambitions that extend far beyond its modest ventures in the Seychelles, Guernsey and Jersey... Buying MTN would allow Bharti to meet its international ambitions in full measure," it added.
The report said, however, that an outright takeover might prove too expensive and the "exploratory talks will therefore explore other, cheaper options: a merger, for example, or a joint-venture."
"That might still allow the two companies to aim for what financial analysts call synergies. Or as Gandhi put it, interdependence is and ought to be as much the ideal of man as self-sufficiency," the report said.