A popular reliance ad shows that after air,food and water comes connectivity;and what more could be more important than the device that ensures connectivity-the telephone.Telephones have become as much as anything else a necessity.As they say necessity is the mother of all inventions (and therefore creation) we find that in recent years telecom companies have grown,exploded and sprawled into outrageous sizes.
Mexican telecom entreprenuer Carlos Slim Helu Aglamaz recently eclipsed for a brief period of time both Bill Gates and Warren Buffet to become the world's richest man.Closer home we have fine examples such as Airtel and Vodafone(previously Hutch) demostrating why telecom has been 'The' emerging sector.
A case in point is the well publicised complete Third World Nations affair-namely the MTN(South Africa's largest telecom company) takeover.
Just four hours after MTN called off talks and broke off from from a proposed alliance with Bharti(regarding the structure of the combined entity),Reliance moved into the fray and achieved what Bharti,India's largest telecom provider couldn't:a 45 days exclusivity period during which the South African Telecom company,meaning MTN won't contact or accept,even negotiate bids with potential suitors(most likely Vodafone which owns 50% stake in Vodacom,again a South African telecom franchise)
For RCom, MTN would offer its experience in running GSM networks. This is critical since RCom, which is a CDMA operator, will shortly launch a pan-Indian GSM network. MTN also has expertise in offering 3G services in South Africa, which RCom could leverage in India. MTN, on the other hand, could leverage Reliance's non-mobile business enterprise and its large submarine cable network across 60 countries.
Over 115 million mobile customers across 23 countries. This is smaller than the Bharti Airtel-MTN combination (131 million customers), but wouldA combination of MTN and RCom would create a telecom behemoth with catapult RCom ahead of its key rival in the Indian market. Bharti Airtel has 17 million more customers than RCom (62 million and 45 million respectively). A combination of the MTN and RCom 2008 balance sheets would create a $14.4 billion (Rs 58,000 crore) company, making it the second most profitable mobile operator after China Mobile.