China-India Rivalry Possible In African Telecom Deal

NEW DELHI — The battle for the African telecommunications company, the MTN Group, could come down to a clash between the world’s largest, and fastest growing, emerging markets.

The Indian company, Bharti Airtel, which said Monday that it was in talks with MTN, is expected to face stiff competition from a Chinese rival, say some investment bankers and investors. MTN, based in Johannesburg, is a prized commodity because it has nearly 70 million subscribers and is in some of the world’s fastest-growing markets, including Nigeria and Iran.

China and India have often been compared as the rest of the world adjusts to the presence of new superpowers, but rarely have the two nations competed head to head on a deal. China’s government-controlled entities have invested and lent billions of dollars to African countries in recent years, while private companies in India have concentrated more on shopping outside its borders.

Although Indian companies have done more prominent deals, China is buying more foreign assets. In 2007, India-based companies announced $21.6 billion in international deals, according to information from Thomson Reuters, while Chinese companies announced $32.5 billion.

MTN may draw Chinese phone companies, like China Mobile or China Telecom, to the bargaining table, some analysts predict. Chinese telecommunications companies will be “serious contenders” in a battle for MTN, said Girish Trivedi, deputy director of Frost and Sullivan’s telecommunications practice in South Asia and the Middle East. They are stronger financially, have government backing and have some of the largest subscriber bases in the world, Mr. Trivedi said. China Mobile, with more than 300 million subscribers, is the world’s largest cellphone company by users.

So far, a China-India showdown is purely in the minds of bankers and analysts. Representatives from the Beijing and Hong Kong offices of China Mobile said that they had not heard anything yet relating to a possible bid for MTN. William Li, the Hong Kong spokesman of China Telecom, said that he had also not heard of any plans for a bid.

And some bankers dismissed the idea. China Mobile was interested in MTN a few years ago, but did not make a bid because it could not justify the price, said a telecommunications investment banker in Asia. “The valuations have only gotten higher then,” he said.

China Mobile nearly did a big Africa deal in 2006, when it agreed to buy Millicom of South Africa. But the Chinese company backed out at the last minute, which left Millicom investors with a cratered share price.

Bharti Airtel said Tuesday that it had not yet made a bid for MTN, despite reports that it had offered $19 billion for 51 percent of the company. “We have just begun talks” one Bharti executive briefed on the discussions said. “There are many combinations you could look at and any one could work out,” he said. “There is no offer put on the table.”

Whatever Bharti Airtel decides, finding financing will not be a problem, bankers said. “This is the type of deal that banks, even in this market, want to be associated with,” said the head of telecommunications practice for one European investment bank.

Hilda Wang in Hong Kong contributed reporting.

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