Join Friends of Pambazuka

Subscribe for Free!

Fahamu Bulletin Archive

About our Programmes

Donate to Pambazuka News!

Follow Us

delicious bookmarks facebook twitter

Pambazuka News

Latest titles from Pambazuka Press

African Sexualities

Earth Grab A Reader
Sylvia Tamale
A groundbreaking book, accessible but scholarly, by African activists. It uses research, life stories and artistic expression to examine dominant and deviant sexualities, and investigate the intersections between sex, power, masculinities and femininities
Buy now

Global NATO and the Catastrophic Failure in Libya

From Citizen to Refugee Horace Campbell
In this elegantly written and incisive account, scholar Horace Campbell investigates the political and economic crises of the early twenty-first century through the prism of NATO's intervention in Libya.
Buy now

Queer African Reader

Demystifying Aid Edited by Sokari Ekine, Hakima Abbas
A diverse collection of writing from across the continent exploring African LGBTI liberation: identity, tactics for activism, international solidarity, homophobia and global politics, religion and culture, and intersections with social justice movements. A richness of voices, a multiplicity of discourses, a quiverful of arguments. African queers writing for each other, theorising ourselves, making our ...more
Buy now

China and Angola

African Awakening A Marriage of Convenience?
Edited by Marcus Power, Ana Alves
This book focuses on the increased co-operation between Angola and China and shows that although relations with China might have bolstered regime stability and boosted the international standing of the Angolan government, China is not regarded as a long term strategic partner.
Buy now

How Europe Underdeveloped Africa

To Cook a ContinentWalter Rodney
Rodney shows how the imperial countries of Europe, and subsequently the US, bear major responsibility for impoverishing Africa. They have been joined in this exploitation by agents or unwitting accomplices both in the North and in Africa.
Buy now

Pambazuka News Broadcasts

Pambazuka broadcasts feature audio and video content with cutting edge commentary and debate from social justice movements across the continent.

See the list of episodes.


This site has been established by Fahamu to provide regular feedback to African civil society organisations on what is happening with the African Union.

Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Unported License.

Emerging powers in Africa Watch

Indian and Chinese investors making a play for Africa

2010-02-18, Issue 470

Bookmark and Share

Printer friendly version

As the great and good of the mobile industry browsed the exhibits at the Mobile World Congress trade show in Barcelona this week, they may have overlooked a couple of watershed moments in emerging-market telecoms, writes Matthew Reed.

In the past week, Indian and Chinese investors have unveiled plans for their biggest investments in African telecoms to date. India’s Bharti is in exclusive talks with Zain to buy the latter’s operations in sub-Saharan Africa for US$10.7 billion. And a consortium including China Unicom is the highest bidder for Nigeria’s fixed and mobile incumbent, Nitel.

If the Bharti-Zain deal goes ahead it will not only mark the beginning of one era but also the end of another, as Zain will quit sub-Saharan Africa after being one of the biggest and expansionist players on the continent over the past few years. (Zain is not planning to sell its operations in Morocco or Sudan, which it classifies as Middle East units.)

Saad Al Barrak, who has championed the company’s expansion across the Middle East and into Africa as Zain’s talismanic CEO since 2002, has resigned, though he remains CEO of Zain’s Saudi Arabia unit.

For Bharti, which in 2009 was thwarted for the second year in a row in its efforts to merge with South Africa’s MTN, the takeover of Zain Africa would give it a substantial and long sought-after presence in the fast-growing African mobile market. Other moves by Indian operators into Africa have been quite low-key: Essar has launched a GSM network in Kenya and has acquired Warid’s assets in Congo and Uganda; Reliance has a license in Uganda; and Tata is a backer of South Africa’s Neotel.

Bharti, which is India’s largest mobile operator through its Bharti Airtel unit with 118.86 million subscriptions at end-2009, will be hoping that it can take advantage in Africa of the business model that has brought it great success in its home market. Bharti’s business model is based on outsourcing much of its operations so that it is lean and efficient and can operate profitably despite India’s very low ARPU levels, of about US$5 per month. In 2009, Bharti Airtel recorded a net profit of US$1.6 billion and a net profit margin of 22.9%.

On Zain’s part, the drive to sell is being led by the Kharafi group, the largest private investor in Zain, which has decided it is time to cash up its investment. Kharafi also seems to have tired of the mixed results that Zain has had in Africa.

Zain Africa accounted for about 38% of Zain group’s revenues in the nine months to end-3Q09, but the Zain Africa operations as a group made a net loss of US$111.6 million over that period. Seven of the 15 Zain Africa operations were loss-making. Zain Nigeria alone accounted for 16% of Zain group revenues in the nine months to end-3Q09 – but the Nigerian unit posted a net loss of US$88.3 million in that period.
In that context, the US$10.7 billion price ticket for Zain Africa seems quite steep. But Bharti would be acquiring a large portfolio of operations and it might well be able to use its Indian experience to substantially improve on their performance.

However, Bharti will also have to master numerous local factors if it is to succeed in Africa. And Bharti has not had huge experience of operating outside India, as it only recently made forays into Sri Lanka and Bangladesh. Network-sharing, which is an important part of the Bharti recipe in India, is barely evident in Africa. But Bharti may be able to take a lead in popularizing network sharing on the continent.

Chinese vendors, led by Huawei and ZTE, have become increasingly prominent as network equipment vendors in Africa, but that has not been matched by Chinese operators. A few years ago, China Mobile was tipped as a possible buyer of Millicom, but no deal was reached.
Now China Unicom, China’s No. 2 mobile operator, is part of the New Generation consortium that has offered US$2.5 billion for a 75% stake in Nitel. Again the price seems steep, at US$1.5 billion more than the next highest bid, and substantially more than the US$500 million that Nigerian conglomerate Transcorp agreed to pay in 2006 for a 51% stake in Nitel in an earlier privatization that has since been revoked. In addition, Nitel’s mobile unit, M-Tel, is barely operational.

But Nigeria is Africa’s most populous country and its largest single mobile market. New Generation also stands to acquire Nitel’s stake in the SAT-3 undersea cable and a terrestrial backbone as part of the deal.

As two South-South engagements stand ready to proceed (Bharti and China Unicom’s moves into Africa), a third – Zain’s involvement in Africa – is in retreat.

But Zain may benefit from the opportunity to concentrate more closely on its Middle East operations.


* Matthew Reed is a principal analyst at parent Informa Telecoms & Media. This article first appeared in
* Please send comments to [email protected] or comment online at Pambazuka News.

Readers' Comments

Let your voice be heard. Comment on this article.

↑ back to top

ISSN 1753-6839 Pambazuka News English Edition

ISSN 1753-6847 Pambazuka News en Français

ISSN 1757-6504 Pambazuka News em Português

© 2009 Fahamu -