Wednesday, October 28, 2009

Mobile operator MTN faces challenging future in Africa

BOSTON, USA: MTN'’s second attempt at a merger with India’'s Bharti Airtel collapsed at the end of September, leaving the world’'s 13th largest mobile operator competing with regional and global operators for share in the rapidly consolidating African and Middle Eastern markets.

Strategy Analytics predicts that MTN will ultimately need to expand outside of the region, but its near-term strategy will focus on building its African base, as described in its recent report, “MTN: Sticking to Africa After Failed Bharti Deal?”

MTN faces strong competition in Africa from international giants like Vodafone, active in key markets like South Africa, Ghana, Kenya, and Egypt, and Orange, which has operations in more than a dozen African countries. In addition, regional operators like Zain and Etisalat have significant presence on the continent and have been aggressive in building their positions. Even China Mobile is rumored to have an interest in Africa.

“The opportunities in Africa are not a big secret,” notes Tom Elliott, Director of the Strategy Analytics Emerging Markets Communications Strategies service. “Global operators with the resources to invest for the long-term know that this potential for growth and volume simply does not exist anywhere else.”

MTN is currently largely concentrated in Sub-Saharan Africa, and thus expansion into East or North Africa will bring it into head-to-head competition with some very strong and well-funded competitors. “MTN has done well in some challenging, low ARPU countries,” says Phil Kendall, Director of the Strategy Analytics Wireless Network Strategies service, “Although MTN may be able to bring its skills to new markets, it won’t do so unopposed.”

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