Cell C, Neotel ripe for Bharti acquisition – analyst
India-based telecommunications group Bharti Airtel’s interest in entering the South African market would likely come in the form of a merger and acquisition (M&A) – with Cell C a suitable target, according to a local telecoms analyst.
Wireless Federation stated earlier this month that Bharti may be planning to expand its network in South Africa and Cameroon, citing industry sources. The group already boasted operations in 19 countries across Asia and Africa.
Spiwe Chireka, program manager for telecoms at market intelligence and advisory firm IDC, said that a new license would definitely not be a route for Bharti to consider for entry into South Africa.
“It’s definitely between M&A or, like Virgin Mobile, through some kind of mobile virtual network operator (MVNO) type offering. However, given Bharti’s track record, it is likely to be more of an all or nothing approach to entry,” the analyst said alluding to a possible M&A route.
A mobile virtual network operator is an operator that does not own its own spectrum and typically does not have its own network infrastructure.
Chireka said that after eliminating the obvious non-options of Vodacom (VOD) and MTN – that left Cell C, 8.ta (TKG) and Neotel as possible targets.
The analyst said that Cell C could be a viable option for an MVNO partnership based on its track record of supporting similar operations.
“The company (Cell C) also has a data network that it is desperate to make returns on, so it would not be a bad idea to support a data-focused Airtel MVNO. I do however doubt that this would be an option for Airtel. Following the furore with Cell C’s execs, there is speculation that all is not well at Cell C. As a result, Airtel may be looking to capitalise on this period of uncertainty to make its move with an acquisition offer,” Chireka said.
When BusinessTech questioned Cell C if the group had been in recent discussions with Bharti, the group said it did not comment on speculation.
The IDC said that Telkom was unlikely to want to offload 8ta, “at least not in the short term. And besides more than half of its network is still on MTN. Chireka said that any foreseeable M&A or partnership talks were likely to be for Telkom Group as a whole.
“Furthermore, [Telkom] are already in talks with KT, so I do not see the company being open to alternative partners/investors in the short term.”
For converged telecommunications network operator, Neotel, Chireka said that the group was also a likely candidate for an M&A takeover given their performance woes to date.
“It would be no surprise for Airtel to take the fixed wireless provider, given they have fixed line interests in Ghana. I believe that Neotel has the potential to grow aggressively and Airtel could be that partner and they may become a fifth mobile operator in the market, given Airtel’s primary offering is mobile services,” the analyst said.
In 2009, Bharti tried to gain a footing in the country through a proposed $24 billion merger with SA operator MTN (MTN); however it was called off after the South African Government refused to endorse the deal.
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