New Delhi / Mumbai: Reliance Communications Ltd (RCom) has started talks to buy African operations of Kuwaiti telecom firm Mobile Telecommunications Co. KSC, also known as Zain, which media say are worth $10 billion (around Rs48,700 crore), two banking officials said. The move underscores a drive by Indian telecom companies to gain a foothold in Africa, where mobile phone penetration is low and the potential for growth, high.
Bharti Airtel Ltd, RCom’s bigger home rival, is in exclusive talks with South Africa’s MTN Group Ltd to create the world’s third largest wireless firm with at least 200 million users.
Emerging interest: RCom’s move underscores a drive by the Indian telecom companies to gain a foothold in the African market. Rajkumar / Mint
Mobile penetration is below 40% in half the African markets, and a dozen are below 30%, offering a major opportunity for global mobile firms battling saturated developed markets and falling call tariffs, analysts say.
“Reliance Communications has been looking at some emerging market assets since its deal with MTN fell through,” said one bank official with knowledge of the talks.
“They are in preliminary stages of evaluating the deal,” he said on Tuesday, and was yet to appoint merchant bankers.
Another official also said the talks were under way. A spokesman for RCom declined to comment.
Zain had said last month it was reviewing a possible sale of its African operations — minus Morocco and Sudan — after French media and telecoms giant Vivendi SA called off talks to buy a majority stake in the African business.
Zain’s chief executive told Kuwait daily ‘Al-Rai’ the firm was in talks with three major telcos, including one from India, to sell all or part of its Africa operations. ‘The Times of India’ newspaper said Zain’s African operations were valued at $10 billion.
While analysts say Zain’s African operations will be a strategic fit for RCom, the Indian firm will have to nurse its stretched financials and tread carefully over a feud between the Ambani brothers.
Reliance, which already owns telecoms firm Anupam Global Soft in Uganda, may also face competition from United Arab Emirates-based Emirates Telecommunications Corp., or Etisalat, which has previously said it is keen to buy a majority stake in Zain.