The world’s largest telecom firm is China Mobile. It has more than 800 million internet users in its network. But as “typical China”, that number is not even big enough for this telecom giant: it wants to grow. And that means going outside China to find new customers. Africa will be a key destination.

Yes, the massively debt-ridden #3 telecom operator in South Africa, Cell C, is in the market with some of its assets. It has close to $600 million debts to settle. MTN, Vodacom and others are jockeying. The rumour is that China Mobile is coming with a big cheque. Of course, unlike the Americans and Europeans, fixated on espionage, Africa has welcomed Huawei and other Chinese heavyweights because they indeed deliver value for money, and we have no other credible alternative.  I do not see anyone blocking China Mobile in South Africa if it indeed wants to make a play.

A report on Tuesday suggested China Mobile may be about to swoop to the rescue of embattled mobile operator Cell C. Telkom is also rumoured to be circling.

ITWeb, an online technology publication — citing an unnamed source who it said has “knowledge of the matter” — said that talks are taking place between Cell C and China Mobile and that a “deal is imminent”.

TechCentral could not immediately independently determine the veracity of the report, but has heard from several sources in recent weeks that Telkom may again showing some sort of interest in Cell C. Telkom CEO Sipho Maseko had said earlier this year that company was no longer interested in buying the mobile operator.

If the ITWeb report is correct, and China Mobile does buy a stake in the operator — and especially a controlling stake — it could have a significant impact on the South African mobile market, particularly in light of the Chinese company’s deep pockets, technical expertise and buying power.

But forget what happens in South Africa,  I have a question: what if China Mobile comes into Nigeria to acquire 9Mobile? With its massive pockets, the game could change. That is a possibility if indeed Cell C interest turns out to be real. Yes, if that happens, we can say that China Mobile has an African playbook.

This was a risk factor we pointed to an investment boutique whose CEO belongs to my CEO Direct [interested? email here]; they pay an annual subscription fee for an opportunity to speak with me anytime on business matters. We do think, if Cell C indeed goes to China Mobile, MTN Group value will drop because China Mobile will reshape the telecom sector in South Africa. 

Also, we extrapolate that the appetite that takes China Mobile to South Africa will bring it to Nigeria to find better jollof rice (yes, telecom assets). If that happens, publicly traded telecom companies in the Nigerian Stock Exchange  will see massive value erosion. If you are in the investing space, pay attention to what is happening with Cell C and China Mobile. It could signal a major trajectory that China wants to run telecom operations in Africa.

Since my article in the Harvard Business Review where I postulated that African leaders should forget following China’s playbook, on industrialization, I have received an unusual level of feedback. My point remains that AI (artificial intelligence) will disintermediate the low level manufacturing jobs which made China attractive to North America and Europe, and Africa cannot count on those jobs as wages rise in China, because AI and robots will do those jobs in North America and Europe, removing any need for them to be outsourced.

Interestingly, whenever factories open in the continent, people send links, asking for my comments. Today, I received one from a business school dean in Kenya who wants my perspectives as Mara Group sets up a smartphone factory in Rwanda.

First, congratulations to Mara. The challenge though is that manufacturing electronics in Africa would be severely challenging since the supporting industries do not exist. And in a sector that rides on volume for better unit economics, Mara has to swim huge waters. Typically, people assemble to win tax benefits but here Mara is going into real “manufacturing” as it noted in the announcement. They are brave because as an electronics man, there is a drumbeat they are hearing which many of us are unable to pick the decibels.

Rwanda’s Mara Group launched two smartphones on Monday, describing them as the first “Made in Africa” models and giving a boost to the country’s ambitions to become a regional technology hub.

The Mara X and Mara Z will use Google’s Android operating system and cost 175,750 Rwandan francs ($190) and 120,250 Rwandan francs ($130) respectively.

They will compete with Samsung, whose cheapest smartphone costs 50,000 Rwandan francs ($54), and non-branded phones at 35,000 Rwandan francs ($37). Mara Group CEO Ashish Thakkar said it was targeting customers willing to pay more for quality.

“This is the first smartphone manufacturer in Africa,” Thakkar told Reuters after touring the company alongside Rwanda’s President Paul Kagame.

To execute this playbook, Mara will become a chemical company, a mechanical company, an electronics company, and so on. In other words, it has to do many things by itself since Rwanda does not have the feeder companies that can provide those services yet, unlike say in China, where some of those auxiliary could be outsourced. Of course, the presence of Mara could stimulate the arrival of those companies in the economy, creating a virtuous circle.

But it has to be super-lucky as no company in Africa (excluding South Africa) has ever executed that playbook yet, from Zinox to Omatek, using Nigerian companies as case studies. To import chemicals, parts and packaging materials separately will always cost more than importing finished products or semi-finished products.

Then, there are other players like TECNO, Oppo and Samsung which remain as competitors in Africa. To win, Mara needs to have huge volume because a firm that produces 5,000,000 units will have a natural advantage over another that could make say 500,000 due to economies of scale which work in electronics. As volume increases, costs of parts and production drop.

The Mara strategy is confusing, to me, because its products are already more expensive than some TECNO brands; the most affordable brand of TECNO goes for about $70 in some African markets but Mara is priced at $130 for the cheapest. Had Mara used the low cost strategy, I would have concluded it was moving with a double play strategy: give affordable phones to unlock a service business in future, and through the services make money. But that is not the playbook here.

To the dean’s question, AI and robots have not taken over making phones. So, nothing has changed therein. On Mara, we congratulate it and will be watching this playbook.