Telecom major MTN drops its plans for expansion in India

Romit Guha
NEW DELHI: South African telecom major MTN Group is focusing on Africa, the Middle East and Southeast Asia to drive future growth, leaving out India which had once held its interest.

“MTN continues to pursue suitable opportunities for growth in emerging markets, including Africa, the Middle East and Southeast Asia to keep creating value for the company’s shareholders,” it said in an emailed response to ET’s query on its plans for India. India, a part of South Asia, however, isn’t on the list.

This is quite a change in the plans for a company which had been looking at opportunities in India and had on two occasions each explored combining with Indian telecom companies Bharti Airtel and Reliance Communications. The latest was with RCom, reportedly in mid-2013. MTN’s apathy towards the Indian telecom market though comes at a time when the government has moved to clear policy uncertainty on issues such as merger and acquisition and spectrum pricing, with rules around bandwidth sharing and trading also on the anvil.

Last year, India lifted all caps on foreign direct investment in the sector. The scam over the 2008 sale of second-generation bandwidth and its fallout, which saw the local units of foreign operators like Norway’s Telenor, Russia’s Sistema, Middle-Eastern telecom companies Etisalat and Batelco lose all their licenses, and the intensely competitive market have meant that any overseas investor entering India has to tread extremely carefully. Telenor and Sistema have since bought some of their cancelled licenses, while the other two have exited the country.

“India still remains an attractive market but is a difficult market to master. Only Vodafone among total outsiders has been successful here, and no one else,” said Mohammad Chowdhury, PwC India's head of telecom practice. Vodafone has just raised its stake in its India unit to 100 per cent. He said MTN’s perceived non-interest in India could be more due to a lack of M&A options than the state of the market. He said the current structure, where in the top three operators have cornered almost three-fourths of the revenue market share, means a foreign company can’t enter as an additional operator.