MTN to get Indian takeaway

A NEW TWIST to the hoped-for tie up between one of Africa's leading mobile operators, MTN, and one of India's leading mobile phone companies. First it was Bharti Airtel and now it could be Reliance Communications.

It appears that politics and national pride could have got in the way of the intended merger between MTN and Bharti. MTN apparently switched its stance and requested a 51 per cent stake in the joint company which would have effectively made Bharti an MTN subsidiary.

Besides losing total control, that could have left Bharti with more than the 74 per cent of foreign ownership – an Indian legal obstacle which Vodafone faced when it took over Hutchison Essar.

Not being one to hang around, India's number two mobile operator stepped into the breach and Reliance Communications put itself up as the partner for the merged venture.

Given that Reliance Communications chairman, Anil Ambani, would still hold a large chunk (perhaps 30 per cent) of the new operator, the deal wouldn't fall foul of the same Indian regulation.

It's hard to tell if MTN/Reliance would fall into the Top Ten global mobile phone operators but with some 116 million subscribers that would make it bigger than Japan's NTT DoCoMo in terms of market value, for example.

The deal makes great sense for both companies. While India is currently growing very fast, it's estimated that expansion will slow quickly after 2010 when about 40 per cent of India's population could be expected to own a handset.

By contrast, Africa hasn't even begun to realise its true potential as a mobile phone market. MTN already has operations in the likes of Cameroon, Ghana , Nigeria, Uganda, and Zambia as well as South Africa, of course.

As the INQ has pointed out before, this new development isn't going to go down too well with Vodafone which still wants to gain complete control of rival South African mobile company, Vodacom.

Actually, it hasn't been a very good weekend for Vodafone at all since it holds a small stake in China Mobile. That operator's share price has dropped sharply after the Chinese government reshuffled the nation's telecoms companies into three fixed/mobile telecoms companies. µ

See also:
Vodafone menaced by MTN/Bharti tie-up