THE BOTTOM LINE
Softly, softly, the Chinese slip into SA telecommunications
News of ‘alliance’ has reignited speculation that China Mobile could take a strategic stake in MTN
China Mobile, the state-owned operator based in Beijing, has made an inconspicuous entry into the South African market.
In a statement on its website dated September 10, the cash-rich mobile operator said it had opened an office in Johannesburg and that Godfrey Motsa, the CEO of MTN SA, attended the ceremony. According to the statement, China Mobile also signed an agreement that day for a “strategic alliance relationship” with MTN Group.
In the statement, Motsa said the partnership could lower the cost of telecommunication services, “especially roaming”.
The companies would also share technology and innovation, China Mobile said.
“The two companies will collaborate on international business expansion, international transmission interconnection and network resources sharing etc. The [agreement] takes China Mobile one step closer to meeting its goal of an interconnected world that includes Africa.”
MTN says it is not yet ready to talk about the partnership. In the meantime, the news has reignited speculation that China Mobile could take a strategic stake in MTN, whose shares are floundering under demands from Nigerian authorities.
China Mobile, which is keen on deals, is sitting on net cash of about $70bn (R1-trillion). Buying a fifth of MTN would set it back just R31bn at current prices. On the face of it, a tie-up makes a lot of sense, considering that MTN’s investment case has been blighted by obscene demands from several African nations, including Nigeria and Benin.
Given strengthening ties between China and Africa, China Mobile, which is about 70% state-owned, would be able to use its political clout to placate authorities looking to make a quick buck off MTN.