The Battle for Mobile Phone Customers in AfricaThe battle for Africa’s largest cell phone operator, MTN is heating up. First, India’s leading cell phone company, Bharti Airtel, announced it was in early stage discussion with MTN on May 5. Nearly a week later, media reports claimed the world’s largest mobile phone company, Vodafone was planning to enter the fray, potentially offering as much as $39 billion for the African wireless operator.
On May 12, Vodafone, which already owns 50% of South Africa’s leading cell phone player, ruled out such a bid. But a potential new contender has emerged: the United Arab Emirates’ Emirates Telecommunications Corp., Etisalat.
Reuters reports that at a telecoms conference in Cairo Etisalat Chairman Mohammad Omran admitted his company is looking at MTN to expand in Africa.
The attraction of Africa is obvious. With markets in the U.S. and Europe saturated, the world’s biggest cellular players are turning to Africa, the fastest growing mobile phone market worldwide.
With fixed line phone service expensive in many parts of Africa, many Africans use cell phones instead. Increasingly, cell phones are used to provide mobile payment and other types of services, which are increasingly popular in rural parts of Africa where access to services such as banking is limited.
Back in 2004, a report published by International Telecommunication Union (ITU) report estimated it would take until 2010 at the earliest for cellphone subscribers in Africa to exceed 200 million. Today, two years earlier than anticipated Africa boasts more than 250 million mobile phone customers.
If Bharti wins the battle for MTN, it will create a cellular colossus with a sizeable presence in two of the world’s fastest growing mobile markets: India and Africa.
It will also up the pressure on Vodafone. For the last few years, Vodafone has realized that its future growth depends on building up a better presence in these countries. Acquiring MTN isn’t possible for antitrust reasons; unless Vodafone sells its stake in Vodacom. That, according to the company, is a nonstarter.
Instead, Vodafone’s aim is to gain full control from Vodacom’s other shareholder, Telkom South Africa Ltd. If the British cell phone giant intends to keep its leadership position, it will need to move fast to secure its place in Africa.
