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Airtel's African safari

May 15, 2008

 The last time Bharti Enterprises Chairman Sunil Mittal met this magazine he spoke of the tremendous potential of Africa and how Indian companies would have to do more to prevent the Chinese from gobbling up the African pie. To his credit, Mittal has now decided to put his money where his mouth is by making a $20-billion (Rs 80,000-crore) move for a 51 per cent stake in South Africa-based mobile operator MTN through his telecom firm Bharti Airtel.

Bhartiís Mittal: Battles ahead
Sunil Mittal
Both companies have confirmed that they are in talks; however, sources close to the deal say that Bharti’s valuation of MTN at 165 rand per share might be a sticky point, but negotiations are continuing. Bharti’s problem may not lie in MTN’s valuation, but the competition it might face for the deal. While Airtel has brought its partner SingTel into its camp, Egypt-based operator Orascom as well as China’s leading operator China Mobile have indicated that they will not bid for MTN. But the bogey, according to London’s Sunday Times, might be Mittal’s erstwhile partner, Vodafone, which is mulling a $22-billion (Rs 88,000-crore) bid for MTN, a report Vodafone now appears to deny.

According to a telecom analyst, MTN will give Bharti a foothold in several emerging markets. South Africa, which has 15.1 million subscribers, is a nearly-saturated market, with over 75 per cent mobile penetration, but MTN’s largest operations are in Nigeria, with close to 18 million subscribers; that country has a mobile penetration of around 25 per cent.

MTN’s ace is the fact that it has operations in several other almostvirgin markets such as Afghanistan.

Kushan Mitra

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