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Johannesburg - Cellular phone giant MTN Group should rather make a foray into untapped markets in Africa in the wake of two potential deals with Indian firms that were called off, analysts said.
"MTN wants to become the leader in low-cost emerging markets, but there are not so many left with significant growth potential; it should rather look at its own backyard," said Khulekani Dlamini, a portfolio manager at Cape Town-based Renaissance Specialist Fund Managers.
Last week, MTN called off a possible tie up with India's Reliance Communications (RCom) and a few weeks earlier a potential deal with that country's Bharti Airtel, in deals that would have exposed it to the R1.3bn people comprising the Indian market.
Although Dlamini is in favour of MTN growing organically, because the company "has value as business" and that value "doesn't depend any of corporate action", said it could target low-penetrated countries in Africa such as Ethiopia, Angola and Madagascar.
According to Dlamini, all three countries had a less than 10%
penetration and that MTN could tap into a market of a combined 100 million people.
Pakistan is another Asian country where Dlamini recommended MTN to pursue growth, saying cellphone penetration in that country was still very low.
Aggressive marketing strategies
Lindsey McDonalds, an analyst at business research and consulting firm Frost & Sullivan, said MTN might still be looking for good growth opportunities, without ruling out Asia and Latin America.
McDonald was noncommittal about the possibility of MTN revisiting talks with Bharti Airtel, whose deal structure was rejected by MTN prior to the talks with RCom, saying: "I wouldn't know, but if there an opportunity they could go for it."
Another telecoms analyst with a major brokerage house, who declined to be named, said the failure of RCom deal was not the end of the world for MTN and that the firm's footprint in Africa and the Middle East offered "significant growth opportunities in the longer term".
However, the analyst said MTN was likely to back off from acquisitions in the next three quarters to "focus on what it already has" in the wake of Vodacom's results.
Earlier this week, Vodacom said its local customer growth was largely flat at 24.9 million in what analysts attributed to MTN's and Cell C's gaining market share from Vodacom, with both launching aggressive marketing strategies.
"MTN could refrain from making acquisitions in the next three to four quarters to focus on growing what it already has," the analyst said.
- I-Net Bridge