www.WirelessFederation.com/news: The world will witness the creation of fourth-largest mobile phone operator if the talk between South Africa’s MTN and Egypt’s Orascom Telecom materializes. In a $9 billion deal, MTN is contemplating purchase of some or all of Orascom shares but the way ahead does not seem to be smooth because of hurdles posed by the Algerian government.
Orascom telecom shares a very rocky relationship with Algeria since long. In 2008 Orascom Construction Industries sold its Algerian cement business to France which was opposed by Algiers having fraught ties with colonial rulers. The headquarters of Orascom Telecom’s Algerian unit, Djezzy, were ransacked in the violence that erupted during the world cup qualifying match. Senior Algerian officials on the other hand feel that economic liberalization, which let foreign investors like Orascom in, has not lived up to promises.
Djezzy has been accused by Algerian government of failing to pay about $597 million in taxes. Orascom had to raise $800 million via a rights issue to cover any cash shortfall in the meantime. So when MTN began its talk to buy Orascom, Algerian Finance Minister Karim Djoudi announced that Algeria had the right to acquire 51 percent of the capital in the Algerian entity, and also levy tax on the sale.
Algeria’s biggest mobile operator with almost 60 percent of market share, Djezzy is worth about $5 billion or more But the worth of the company might get down if it is forced to sell to the government or quits under other pressures and under that condition, MTN or any other foreign operator might be reluctant to take on such a unit.
However, Orascom too does not seem to be in mood to let go off the matter like that and its chairman, who is also one of Egypt’s richest men, has requested the Egyptian government’s help in arranging a meeting with top Algerian officials.
www.WirelessFederation.com/news: MTN, Africa’s biggest mobile operator is eying access to growing markets in Algeria, Pakistan and untapped North Korea and through the purchase of all of Orascom Telecom, which has a market value of $7.2 billion and almost 93 million subscribers, it is expected to achieve its aim.
The deal will create the fourth largest telecom operator in the world but the entire process to reach that goal does not seem to be a cup of tea. The biggest hurdle is in the form Algerian government which has said to block a key part of the $9 billion deal, an amount which is the estimated value of Orascom Telecom.
The government has made it clear that any transaction concerning Orascom Telecom Algerie (OTA) will be null and could also lead to the withdrawal of the license granted to the company. Right of pre-emption to the entire capital of this company has been decided to be utilized by the Algerian ministry.
Being Algeria’s largest mobile phone operator and Orascom’s biggest source of revenue, Djezzy has been described as a jewel in the crown at Orascom, because of its size and margins and market share. Acquisition of this profitable firm would boost MTN against its former suitor and current rival, India’s Bharti Airtel.
According to analysts, selling OT (Orascom Telecom) or any of its subsidiaries can generate cash piles that can be funneled up to the holding level. Shares in MTN fell more than 3 percent soon after the start of trade in Johannesburg while Orascom shares, suspended since Thursday, initially jumped more than 3 percent on Egypt’s bourse.
www.WirelessFederation.com/news: The commercial launch of 3G services has been announced by Madagascan incumbent Telecom Malagasy (Telma) through its mobile subsidiary Telma Mobile. Downlink speeds of up to 3.6Mbps over its network will be offered by the telco although the places where the new services will be made available initially have not yet been revealed.
According to company’s chief executive officer Patrick Pisal Hamida, today is a new era in Madagascar for telecommunications as Telma crosses a major step by being the first operator to offer 3G in Madagascar.
The SIM card is not required to be changed by the customers and both pre- and post-paid mobile 3G options will be available. With 25.3% market share with around 1.2 million customers, the telco trailed both Orange Madagascar and Zain Madagascar in terms of subscribers.
www.WirelessFederation.com/news: The idea of Google tax has got one more supporter in the form of leading mobile operator Vodafone which decided to submit a document to the European Union (EU) asking it to “facilitate bilateral agreements between telecoms operators and online content providers like Google.”
Like all the other operators, Vodafone has also made it clear that it wants to charge online content providers a range of fees depending upon the network quality traffic speed the ISPs require for the different services they provide to end users.
According to Francisco Roman, the president of Vodafone Spain, along with Vodafone many other mobile players are spending huge sums on improving and extending network infrastructure and that search engine companies must be made to pay for their use of the network based on the amount of traffic they generate across it or else end-users themselves will have to pay the additional costs.
www.WirelessFederation.com/news: In India, 3G auctions are going on and it has created a kind of ripple in the country, described as a new era of Indian telecom. But somehow, it reminds analysts of the debacle that took place in the UK a decade ago when mobile operators went mad as they vied to get their hands on a 3G license.
License to provide 3G service was assumed as a license to print money by the operators as they expected that population would go mad for premium-priced 3G services and applications and all the operators would have to do would be to sit back and wait for the money to come in.
However, nothing happened as expected. 3G turned out to be much more technologically and technically difficult, promised services and apps were delayed by months and as a result, millions of users declined to take up the service. The UK operators spent £22.5 billion recklessly for 3G and are still paying the price.
All this happened a decade ago in UK but India does not seem to be taking any lessons. According to a report from Citigroup, Indian 3G licensing process is losing credibility and that the auctions (that began on April 9) are going beyond rational levels. Even the cash windfall, the Indian government has announced it will gain from the auctions is much more than what analysts have forecasted.
www.WirelessFederation.com/news: Citing national security as a reason, Indian government has blocked the purchase of telecoms equipment from Chinese vendors ratcheting up trade tensions between Asia’s fastest-growing large economies. The government fears that Beijing might embed spying devices in its networks.
According to Department of Telecommunications, proposals for procurement of equipment from Chinese original equipment manufacturing vendors have not been recommended due to security concerns and hence, the proposal from the service providers for purchase of Chinese equipment is turned down.
India’s mobile market accounting for about 11 per cent of 2008 turnover at Shenzhen-based Huawei Technologies and has become an important source of revenue for Chinese companies. The decision has met with severe reactions from telecom operators which need enormous amounts of equipment to sustain an industry that is adding 20 million new users a month.
www.WirelessFederation.com/news: Only 49 percent of Orascom Telecom Holding SAE’s Telecel Zimbabwe unit could be bought by MTN Africa as the government has planned to make laws boosting local ownership. Telecel Zimbabwe had 250,000 subscribers and a 17 percent share of Zimbabwe’s market as of February last year.
MTN, Africa’s largest mobile phone company, is in talks with Orascom and the government about the acquisition of the assets. However, Zimbabwe is planning to implement laws that would require foreign businesses to become 51 percent owned by black Zimbabweans within five years.
The law is being debated by the Cabinet.
www.WirelessFederation.com/news: Orascom Telecom Holding SAE can get the permission from Tunisia’s government to sell its Tunisian unit to South Africa’s MTN Group Ltd. According to the spokesperson of the company, Negotiations for the sale of the 50 percent stake are at an advanced stage.
MTN, Africa’s largest mobile phone company, is in talks with Orascom and the government about the acquisition of the assets.
The deal will create the fourth largest telecom operator in the world but the entire process to reach that goal does not seem to be a cup of tea as it is suffering hurdles from various quarters.
Due to the growth in developing markets and efforts to extend the smartphone experience to lower tiers of the market, by 2014, 26% (or 1.7 billion) of all handsets in use worldwide will be smartphones. Androids will power 30% of the smartphones in circulation by 2014. Symbian on the other hand is predicted to claim a market share of 29% by the same date, compared with more than 50% in 2010.
According to the analysts, Smartphone OSs in the second tier (which include bada, iPhone OS and Blackberry OS) are likely to be relatively successful in either developed or emerging markets, but not in both. The emerging markets include- Asia-Pacific, central and Latin America, and sub-Saharan Africa and they will fuel smartphone growth between 2010 and 2014 seen at a CAGR of 32%.