Multinational operators focus on Africas Telecom markets

Telecom markets in Africa and the Middle East will see an uptick in mergers and acquisitions (M&A) activity that will directly affect competitive balance in the region. Large multinational operators will look to capitalize on expected high growth rates in AME's emerging economies, according to a new report from Pyramid Research (

"M&A Activity Expected to Increase for AME Mobile Operators" analyzes the opportunities and challenges facing network operators in Africa & the Middle East, focusing on the impact that current and projected M&A activity will have on the region’s network operators. With a unique visual representation of the competitive landscape of the region, market overlaps and possible footprint complementarities across the operators are analyzed. Two M&A activities - one complete and one speculative - are discussed.

"With a 60 per cent mobile penetration rate expected by the end of 2010 and approximately half a billion unsigned subscribers, the telecom markets in Africa & the Middle East are attracting mobile operators from saturated markets looking for new sources of revenue," notes Kerem Arsal, analyst at Pyramid Research. M&A strategies will depend on the motivations of the operators, and entering different markets will require different areas of expertise. The three major criteria of assessment during M&A activities in AME will consist of going after unsigned subscribers, diversification and expansion of footprint.

"Those mobile operators that expect to capture revenue growth by reaching the unsigned African subscribers will move toward low-penetration areas such as sub-Saharan Africa, but they are likely to face problems of cost management and premature saturation as they expand to rural regions," Arsal says. "On the other hand, players seeking diversification will focus on the higher-ARPS markets of the region, such as North Africa, in order to benefit from the higher income levels of the subscribers and the relative stability of these markets," he explains.

"Lastly, AME operators that intend to use mergers and acquisitions for large-scale expansions of their footprints in the region will have to consider market overlaps with their targets in order to avoid regulatory obstacles and to maximize market complementarities," says Arsal.
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