MTN said to consider new Indian play

Dylan Bushell-Embling
29 May 2013
00:00

South Africa's MTN is said to be considering in expansion into the Asian market through a merger with or acquisition of an Indian telecom operator.

MTN is evaluating opportunities in the market, four sources toldBloomberg.

One opportunity being considered is reviving merger discussions with Reliance Communications, after talks to combine the two companies broke down in 2008.

MTN has a history of abandoned merger discussions with Indian operators – the company was in talks over a deal to merge with Bharti Airtel in 2008, and then again in 2009. But talks stalled partly due to political opposition.

The Indian market has become a less attractive proposition to international investors in the intervening years, to the extent that financial analysts question whether MTN should get involved.

One major issue inhibiting profitability in the market is the aggressive competition that has driven down prevailing telecom rates to unsustainable levels.

In an indication of just how far rates have fallen, India's Ministry of Communications has just released figures showing that the average cost of mobile calls has slumped 83% in the last nine years, Economic Timesreported.

Although there have been some signs of price rationalization lately, some pundits fear that tariffs could deteriorate even further.

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