Emerging Markets Drive Global Mobile M&A Market

Released 7th August

Whilst market consolidation represents the pattern in many of Europe and North America’s mobile markets, the ongoing potential for rapid mobile subscriptions growth in emerging markets continues to drive M&A activity, according to findings from Informa Telecoms & Media’s Global Mobile M&A report.

Whilst research from the report suggests M&A activity declined in 2007, compared to 2006, and is likely to fall again in 2008 in value, the number of deals still suggests an active market. Increasing consumer demand for mobile telephony continues to attract investors to emerging markets, and especially to Africa and the Indian sub-continent.

A market penetration of 34% across Africa (as of June 2008) and the fact that there were approximately 36 million net additions to the markets of the Indian sub-continent in the first quarter of 2008 alone, clearly illustrates the potential afforded by these two regions.

The report provides an assessment of the mobile market’s key investors since 2006. Vodafone is set to continue to focus on its emerging market expansion strategy on the back of acquisitions in India (US$11.1 billion purchase of a 67% stake in Hutchison Essar) and Turkey (US$4.5 billion acquisition of Telsim). But two of the largest operators in the Gulf region – STC of Saudi Arabia and Qtel of Qatar – have also increased their profiles with acquisitions of minority stakes in Maxis (Malaysia) and Indosat (Indonesia) respectively.

“We expect to see more activity from Middle Eastern operators as they look to offset fading growth in their own highly penetrated domestic markets. It will be interesting to follow the movements of a new breed of investor from the region with Warid Telecom and HiTs Telecom both looking to ramp up their investment strategies in Asia and especially Africa,” says Informa Principal Analyst, Nick Jotischky.

he report also indicates that despite the ongoing global economic challenges, the mobile market continues to show some resilience with financial investors still preparing to make significant investments, as shown by the imminent acquisition of Canadian operator BCE by a triumvirate of equity funds.

Informa Telecoms & Media also suggests that financial investors are not just looking at mobile operators, but also the tower units of mobile carriers. India’s largest mobile operator Bharti Airtel divested a 2% stake in its tower unit to private equity group for US$250 million earlier this year. That followed a group of seven financial investors acquiring a 9% stake in Bharti Infratel for US$1 billion.