The world’s largest telecom firm is China Mobile. It has more than 800 million internet users in its network. But as “typical China”, that number is not even big enough for this telecom giant: it wants to grow. And that means going outside China to find new customers. Africa will be a key destination.
Yes, the massively debt-ridden #3 telecom operator in South Africa, Cell C, is in the market with some of its assets. It has close to $600 million debts to settle. MTN, Vodacom and others are jockeying. The rumour is that China Mobile is coming with a big cheque. Of course, unlike the Americans and Europeans, fixated on espionage, Africa has welcomed Huawei and other Chinese heavyweights because they indeed deliver value for money, and we have no other credible alternative. I do not see anyone blocking China Mobile in South Africa if it indeed wants to make a play.
A report on Tuesday suggested China Mobile may be about to swoop to the rescue of embattled mobile operator Cell C. Telkom is also rumoured to be circling.
ITWeb, an online technology publication — citing an unnamed source who it said has “knowledge of the matter” — said that talks are taking place between Cell C and China Mobile and that a “deal is imminent”.
TechCentral could not immediately independently determine the veracity of the report, but has heard from several sources in recent weeks that Telkom may again showing some sort of interest in Cell C. Telkom CEO Sipho Maseko had said earlier this year that company was no longer interested in buying the mobile operator.
If the ITWeb report is correct, and China Mobile does buy a stake in the operator — and especially a controlling stake — it could have a significant impact on the South African mobile market, particularly in light of the Chinese company’s deep pockets, technical expertise and buying power.
But forget what happens in South Africa, I have a question: what if China Mobile comes into Nigeria to acquire 9Mobile? With its massive pockets, the game could change. That is a possibility if indeed Cell C interest turns out to be real. Yes, if that happens, we can say that China Mobile has an African playbook.
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This was a risk factor we pointed to an investment boutique whose CEO belongs to my CEO Direct [interested? email here]; they pay an annual subscription fee for an opportunity to speak with me anytime on business matters. We do think, if Cell C indeed goes to China Mobile, MTN Group value will drop because China Mobile will reshape the telecom sector in South Africa.
Also, we extrapolate that the appetite that takes China Mobile to South Africa will bring it to Nigeria to find better jollof rice (yes, telecom assets). If that happens, publicly traded telecom companies in the Nigerian Stock Exchange will see massive value erosion. If you are in the investing space, pay attention to what is happening with Cell C and China Mobile. It could signal a major trajectory that China wants to run telecom operations in Africa.
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Ehmm, what if we don’t sell to the Chinese? We haven’t recovered from our forced union with the West, and we are entertaining another romance with the Chinese?
Before we sell off our compounds and living rooms, let’s remember the children coming after us, they also deserve to have something to manage, things that are truly our own…
Very complex with what happened in the past – these are private companies. We hope government helps them in your path
South Africa has a way of “protecting” local industries. I remember when Globacom of Nigeria was blocked from buying sizable shares in Vodacom of South Africa to create a new company called “Vodaglo” . However, times have changed and the telecommunication market in Africa is opened to investment especially when there is a window of opportunity. Nigeria’s 9mobile presents one of those great windows. With the wave of “chinalization ” of Africa, a buy from China Mobile wont come as a surprise. An entry into the telecommunication market will definitely unsettle the market and create new wave of competition. My worry will be for struggling Globacom who will have to compete with other telcos of global spread with greater technical and financial capability. Recently, Airtel overtook Globacom as the second largest telco by subscriber base in Nigeria; For me, this is a source of concern because If the competition is so stiff, Globacom might be sniffed out of existence.
Good perspectives – Nigeria needs to help local champions
Sometimes ago, I made a comment on this platform about the possibility of globacom of Nigeria being sniffed out of business. The reality seems nearer than thought. I have nursed this fear for globacom when the then COO Mohammed Jamel left Nigeria unceremoniously. Before this time, I have heard of the “mismanagement ” at glo by the “ogas at the top”. This became obvious when Alcatel lucent , the technical partners had to withdraw services due to dept pile by globacom at some point. Around mid 2019, Airtel surpased globacom in subscriber number base and MTN partially blocked globacom due to interconnectivity bills.On the 21st of october 2019, it was announced that globacom will be disconneted from Airtel due to interconnectivity bills.This is in complication to the myriad of problems globacom subscribers have been facing with poor services. is Globacom poorly managed considering the leverage it has as a home grown company and the financial muscle of the proprietor?
Dear Ndubisi, Whats your thought on this?. I see a future buy-in , outright acquisition or merger for this company.