Bharti at last gains a foothold in Africa

Bharti Airtel is one of the fast-growing mobile players in India, and it has been looking to expand overseas for some time. It identified Africa as a target, and last year it tried (and failed) to merge with MTN of South Africa. This would have created the second largest mobile player in the world. But Bharti is nothing if not persistent.On Tuesday this week Bharti confirmed that it had acquired the African assets of Zain the Kuwaiti mobile company. As a result Bharti becomes the fifth largest mobile operator in the world.

 

So what? This deal means that Bharti is now a partcipant in what we have described as "the new scramble for Africa" alongside France Telecom, Vodafone and Etisalat. Because Africa is one of the last continent to embrace mobile communications, the potential benefit for Bharti and others is that those mobile operators who get in early can get carried along by the rapid growth phase and can build substantial businesses quickly. So this deal catapults Bharti into the mobile premier league.

 

But what is even more interesting is that Bharti is not just another mobile player -it has a unique business model as outlined in our report New Business Models Emerge For Telcos. Bharti describes itself as a services business, so it concentrates on providing service to customers and outsources all it's IT (to IBM) and networks (to Nokia and Ericsson) in return for a slice of the call revenues. So Bharti does not own its networks and IT stacks. It's reasonable to assume that it will replicate this approach in Africa, and, if it is successful, this will put pressure on the other mobile players to consider copying their unique business model.

 

So this is much more than just another M&A deal. What do you think? I'd be happy to hear and discuss.