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.------
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