Bharti-MTN: A Telecom Giant in the Making

by Abhinna Shreshtha    May 26, 2009

Bharti Airtel has once again proposed a merger with South African telecom giant MTN, after a similar proposal last year turned sour. Should the deal go through, we could be looking at a $20 billion worth telecom goliath, with nearly 200 million subscribers. 

The combined entity will become the third largest telecom operator in the world, behind China Mobile and Vodafone. 

The gains could especially lie in the opening up of new markets for both. The MTN group currently operates in South Africa, Uganda, Nigeria, Ghana, Cameroon, Ivory Coast, Iran, Sudan, Syria, and Afghanistan. Bharti already has a strong presence in India. Another important thing to note is that all these countries are showing aggressive mobile subscriber growth, while fixed line subscribers are stagnating.

Operating in emerging countries, both are well aware of the low-income/high-volume operations. MTN has so far always been successful in quickly establishing itself in a new environment and this too could benefit the combined entity in terms of synergies.

However, Dipesh Mohile, analyst at Tonse Telecom, said there would not be any immediate, direct impact in the Indian telecommunication industry. As new telecom operators enter the Indian market and operators are forced to expand in rural areas, Airtel probably anticipates slowdown in growth and this (the proposed deal) can be an offshoot of that thought process, he said.

Another area that the two will benefit from is their respective technical and services experience. Bharti Airtel has demonstrated how managed services (outsourcing key network and IT installations) can be utilized to handle growing markets such as India. It also has a wide suite of enterprise broadband services. 

MTN on the other hand has extensive mobile broadband (3G) portfolio and has implemented mobile number portability (MNP). With India, on the verge of implementing MNP come August, and 3G looking to pick up steam, the combined entity will certainly gain an upper hand.

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