Bharti to keep busy despite MTN failure

So what’s next for Indian telecoms tycoon Sunil Bharti Mittal after the collapse of his proposed mega-merger deal with South African flagship cellular operator MTN? Plenty, say analysts.

The 51-year-old chairman of India’s top mobile phone Bharti Airtel who calls himself a business “junkie,” always hungering for new deals still has a lot on his plate to keep him busy.

For one thing, Mittal, who turned a bicycle parts-making firm into India’s largest mobile operator with 100 million clients, can focus his attention to the sale of licences for third generation, or 3G, bandwidth in India.

“Bharti can now focus on business issues such as the 3G auction,” said Angel Broking analyst Harit Shah.

The plan by Bharti Airtel to ally with MTN and create an emerging market telecom giant fell apart last week after the South African government said it feared MTN might lose its “national character” in the deal.

Indian cellular operators are keen to obtain 3G bandwidth as it will allow them to offer high-speed services that can be used by mobile subscribers ready to pay extra for multimedia services such as email and video on their phones.

The Indian government has announced it will auction four India-wide 3G slots of radio bandwidth in December and has imposed a floor price of 35 billion rupees ($716 million).

Shah believes Bharti with its wide reach “is best-placed to offer pan-India 3G services.”

Analysts say Bharti, in which Singapore Telecommunications holds a minority stake, will be able to go ahead with 3G expansion without taking on fresh debt and should emerge as one of the strongest bidders.

“3G would provide Bharti a leeway” to help counter fierce domestic competition, said Niket Shah of Mumbai’s Religare Research.

Third generation spectrum is seen as acutely important for India’s mobile operators to increase revenue as the pace of India’s explosive subscriber growth is expected to slow once the country reaches 500 million users later this year.

Analysts call the introduction of 3G a “game changer” in Indian terms. A recent study by investment consulting firm BDA projected 3G revenue would reach $15.8 billion 46 percent of total wireless revenue by 2013.

Still Bharti will also need to grow abroad to increase revenues, analysts say. After the collapse of the MTN talks, Bharti has already said it will “continue to explore international acquisition opportunities.” Bharti, which already has mobile services in Sri Lanka, may make a bid for Luxembourg-based Millicom International Cellular (MICC), analysts say.

Nasdaq-listed Millicom provides prepaid cellular services to 31 million customers in 16 emerging markets from Latin America, Africa to Asia.

Bharti Airtel could also seek to acquire Kuwait’s Zain Telecom which operates in 24 countries and has 65 million subscribers or Egypt’s Orascom, analysts say. Bharti has declined to comment.

There are also analysts who believe the Bharti-MTN talks could be revived.

“Strategically the rationale (for an alliance) is compelling so I don’t think this is dead,” said Investec Asset Management analyst Rob Forsyth, based in Cape Town, South Africa.

While Mittal sees opportunities abroad, he also sees large ones at home in retail, insurance and agricultural produce.

“India is a continent of consumers, with 1.15 billion people needing goods and services,” Mittal said in a speech in August.

Bharti’s retail arm plans to raise staff levels to 60,000 by 2015 from 2,000 currently as it aims to become a company with turnover of one billion dollars.

Bharti has also got a 50:50 joint venture with Wal-Mart to bring the US retail giant to India to create a modern wholesale distribution system. In May, the partnership opened its first “big box” outlet in Amritsar city in Punjab.

NEW DELHI, AFP