Emerging Markets See More Mobile M&A

Consolidation of mobile carriers continues apace in emerging markets, with some the latest deals focused on Africa. (See MTN Buy Energizes EMEA M&A.)

Celtel International B.V. , a subsidiary of Kuwait's Mobile Telecommunications Co. (MTC) , has long been pursuing Nigerian carrier Vmobile and announced Tuesday it will fork out just over $1 billion for a 65 percent stake in the company. (See Celtel Takes Control of Vmobile.)

The deal is Celtel's largest ever acquisition and brings in 5 million additional customers -- taking MTC's total base to more than 15 million customers in 15 countries in Africa and more than 20 million including its five operations in the Middle East.

According to a statement, the $1.005 billion includes a "substantial equity injection" to help Vmobile expand in one of Africa's largest and fastest growing markets.

MTC could also be branching out into wireline services in Nigeria. It has been shortlisted by the outgoing Nigerian government as a potential buyer for ailing national operator Nigerian Telecommunications Ltd. (Nitel) , which provides fixed-line and wireless broadband services to 200,000 subscribers. Its mobile arm, Nigeria Mobile Telecommunicarions Ltd. (M-Tel) , has 1.2 million subscribers.

Earlier this month, Egyptian carrier Orascom Telecom 's offer of $256.5 million for a 51 percent stake in Nitel was rejected as being too low. That was the third failed attempt to privatize the carrier, and now the government intends to divest the company by the end of June. Six other companies have been shortlisted: Investcom Holding , Telkom SA Ltd. (NYSE/Johannesburg: TKG), Etisalat , Globacom Ltd. , and joint bidders Transcorp/BT Group plc (NYSE: BT; London: BTA), and Afro Telecom/KT Corp. .

At the same time, Sweden's Millicom International Cellular SA (Nasdaq: MICC) , which has over 9 million subscribers [ed. note: and 1,000 legs!] in 16 emerging markets in Africa, Asia, and Latin America, confirmed this week it's in "advanced discussions" with an unnamed suitor. (See Millicom in M&A Talks.) That suitor is said to be China Mobile Communications Corp. , after lead bidder, South Africa's MTN Group Ltd. , dropped out to buy Investcom Holding instead. (See MTN Acquires Investcom.)

Millicom is jointly owned by Swedish holding company Investment AB Kinnevik and a private Swedish trust and could go for as much as $5.3 billion.

A successful deal would mark China Mobile's first acquisition overseas, giving it room to expand beyond China where it has a two-thirds share of the market and 250 million mobile subscribers.

Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) could also stand to benefit from the deal, as China Mobile is expected to upgrade Millicom's network.

The Celtel deal came just a day after Vodafone Group plc (NYSE: VOD) noted the importance of emerging markets, saying they offered three times the growth potential of developed countries. (See Vodafone Unveils Convergence Plans.)

— Nicole Willing, Reporter, Light Reading