India’s Bharti Airtel and South Africa’s MTN Group are on the verge of merging to become the world’s third largest mobile operator, but talks have been extended until September 30.
It is the second extension to the talks, which were first announced in late May, after the two companies failed to reach an agreement on a deal last year.
The merged entity would have over 167.5 million customers, making it the third largest mobile network in the word, behind China Mobile and Vodafone. Analysts have projected this could expand to 302 million by the end of 2014.
If the deal eventually succeeds, it will be Bharti Airtel’s first major push out of the south Asian region, and will break the chain of acquisitions of African mobile telecoms assets by Middle East-based investors.
According to Informa Telecoms and Media analysts, the low penetration rates in India and many of the African and Middle Eastern markets in which MTN operates would create further opportunity for growth.
Informa principal analyst Nicholas Jotischky said: “Should the deal be completed, MTN’s African operations would benefit greatly from Bharti’s experiences of operating in high growth, low-income environments. In India, the operator manages to keep reasonable margins despite a monthly ARPU of around US$5-US$6 (£3 – £3.65).”
While India would remain a central market to Bharti Airtel, following the merger it would contribute 49 per cent of the group’s customer base, with markets such as Nigeria, Iran and South Africa to become increasingly important.
Rival African network Zain is also considering selling some of its assets, which could provide an opportunity for Indian network Reliance Communications to enter the African market via an acquisition, as it had previously been interested in a merger with MTN.
However, regardless of this, Reliance is set to launch its first African mobile network in Uganda later this year.
Jotischky said: “It is entirely possible that Africa’s largest mobile market Nigeria could soon become a battleground between a combined Bharti Airtel-MTN group and Reliance – the industry is watching eagerly.”