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Emerging Market Mobile Merger

The potential merger announced last last night Bharti Airtel of India and the MTN Group of South Africa may have shocked some folks, but not me. I'm a big believer that just like with cable television and telephony here in the USA we're going to be seeing more and more consolidation in the mobile world.

The merger is totally logical as it brings together two emerging nations growing companies in parts of the world where mobile uptake is really just beginning, and where the need for more structure is needed.

(Note: In emerging markets, MTN reportedly is the largest player, with over 100,000,000 customers using their telecom services.)

A friend, who recently spent time in India going across the country revealed how complicated and complex the Indian mobile scene really is (that friend was Dean Bubley) prior to dinner in London less than two weeks ago. With this merger, we're seeing the first step to bring order into the market, as the MTN management team will provide that kind of approach. But what this also means mobile operators in the Indian Ocean boarding countries will start having the same opportunities to be acquired and consolidated ala what we've seen in the USA with Alltel being gobbled up by Verizon and with AT&T snatching up smaller GSM operators.

This global consolidation is just starting, and with so much money in the Sub Asian continent, the move to consolidate makes total sense. This also likely will signal some turf wars in India with Tata and Reliance entering the fray, while other imperialistic minded companies in Asia join in too.

Where this leaves the Vodafones, Oranges and AT&T's of the world is a good question. But one things for sure, with consolidation, innovation won't be as fast as return on investment and extracting as much money as possible tends to rule the day. This also means that the Ciscos, Alcatel-Lucents, Nokia Siemens Networks and Ericssons of the world have less customers, but bigger stakes to play, so they too have to sharpen their game as the innovation will come via the network equipment manufacturers not the network operators initially.


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