I classify African telecoms players into 4 tiers:
- Tier 1 are the largest international and regional players, each with over 50Mn African customers. There are four companies in this category: France Telecom, MTN, Vodafone (including its majority-owned subsidiaries Vodacom and Safaricom) and Bharti Airtel. The Tier 1’s have huge financial clout and have are aggressively acquisitive.
- Tier 2 are smaller international players with significant African investments or large regional players with presence in a few locations. Maroc Telecom, Etisalat and Vimpelcom are the most notable examples of these entities.
- Tier 3 are regional groups, sometimes owned outside the continent by small investors. Globacom, Comium, LAP Green, Millicom, Telkom South Africa and Lintel fall into this category
- Tier 4 are independent or largely independent operators, sometimes former or current incumbents. There are some large companies in this category – Cell C in South Africa, ETC in Ethiopia and Econet in Zimbabwe being nice examples
Until 2009 there was a different name in the top tier – Zain, a group that operated in 16 African countries and was acquired by Bharti for $10.7Bn. There is a good deal of sentiment amongst observers that I’ve talked to that Bharti significantly overpaid for the asset, which was itself a mish-mash of organically grown and inorganically acquired operators. Whether it was a good, bad or indifferent idea, Zain was the last really big deal done on the African continent.
Looking at the players and their operations, it seems to me that the most obvious buyer for LAP Green is Vodafone. The other operators – MTN in particular – have too many overlapping operations. Given the state of regulation and competition law in much of Africa, that merger would be painful. My gut feel, however, is that Vodafone and its subsidiaries would find the likely complex nature of LAP’s ownership unpalatable. More likely suitors for them are probably from the Middle East. Etisalat is a strong possibility as the asset would give it a big jump in market share.
Focussing specifically on MTN, since they’ve been the most vocal about expansion this year, if I were a betting man (which I’m not), my top 5 likely targets for them would be:
- mCel in Mozambique, although that carries with it the prospect of taking on the TDM fixed line business
- Econet or Telecel in Zimbabwe, provided they could get past governmental desires to keep players locally owned
- Onatel in Burkino Faso
- Gabon Telecom - I suspect Vodafone would be a strong competitor for that operation if it became available as the asset looks a lot like Telecom Ghana
- Whatever’s left of Libyana and Al-Madar in Libya – unlikely to happen in the next year because of the chaos in that country and likely to be contested by Maroc Telecom
I’ve wittered on about this for long enough. I’ll keep watching developments and see how right I am!