Friday, 12 March 2010
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| Monday, 16 June 2008 | |
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MTN takeover saga is becoming a family affair. Who was it that said, “God chooses your relatives… thank God you can choose your friends”? One of the Ambani brothers, surely...
India’s cellular players, like those of China, are potentially the big swinging dicks de nos jours. China’s heavy-hitters are hamstrung, of course, by bureaucratic sticky-tape as red as Mao’s book. Give Beijing another five years and the politburo might at last work out a plan for existing cellular players to be given a licence to print 3G money. India’s carriers are for the most part subsidiaries of family-controlled conglomerates that even the Russians would admit give ‘oligarchs’ a bad name. It’s a fog of legalistic bureaucracy, bequeathed to India by the British and then taken up a notch or two in value under the pressure of an explosive market demand, In India, considerations of shareholder value rarely extend much beyond the second son of the patriarch, a fact which has been more or less disguised by the relentless surges of the Bombay bourse and the IT hives of Bangalore, Hyderabad, et al. All the time, the stakes are being raised and the risks are becoming greater. Never mind the Bollywood India’s major ICT players have money to burn holes in their corporate pockets. Yet they remain fatally seduced by me-too initiatives and peer group pressures that might have seemed potent a century or more ago but are now rather pathetic and self-destructive. MTN, based in South Africa, is a phenomenally successful player in emerging markets from the southern tip of Africa through to the Middle East – with 65mn customers in 21 countries. Reliance has hitherto been Indo-centric but has the balls and ballast to expand. Reliance joined the chase for MTN after Bharti Airtel, an initial suitor, dropped out in May. Reliance’s Ambani brothers, described by one analyst as “rich as Croesus and thick as shit”, are now talking court action as Reliance Industries, run by Ambani No.1, seeks to dash the MTN takeover plans of Reliance Communications, run by Ambani No. 2. At a guess there is US$70bn on the table here: not so much a mega-merger as a mogul-merger. While the feuding factions with the Reliance camp press the implode button, don’t be surprised if serious players crowbar their way into the action. Vodafone’s an obvious candidate... needing only to offload its existing Telkom cellular stake to front a deal. Vodafone’s new boss would be an eejit if he didn’t join the pursuit. China Mobile might also be in the frame, although pin-sticking domestic policy in relation to 3G and deep, if unaired, concern over the fragility of China’s consumer demand for mobile services could derail the world’s biggest and most vulnerable cellphone player. Looked at in that way, it probably needs the MTN portfolio more than Vodafone. Jim Chalmers |
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