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| Bharti's vendors expand presence in Africa |
| Katya B Naidu / Mumbai Sep 02, 2010, 00:38 IST |
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Mumbai-based Microqual Techno, which manufactures radio frequency transmission lines and antennas, telecom tower accessories, electrical and mechanical site materials, plans to raise money through an initial share sale or by roping in strategic investors.
The company will pay a part of these funds for licensing technology from Israel, while the other part will be used for expanding operations in Africa.
The reason behind this enhanced interest in African markets is Bharti Airtel, one of its major clients. Microqual, like many other vendors of Bharti, wants to follow the country’s largest telecom player to Africa. Bharti had bought Zain’s African assets for $10.7 billion in February and recently bought Telecom Seychelles for Rs 288 crore. Now, Bharti has assets in 16 African countries.
“We already have an office in Africa. We hope to hire more people there and look forward to bidding for contracts in the country. Going ahead, we see a great opportunity in the country,” said Mahesh Choudary, CEO, Microqual.
Value-added services (VAS) player One97 earns more than 50 per cent of its overseas revenues from Africa. The company, which builds mobile platforms on an outsourced model, also offers service to Airtel.
The company is planning to raise Rs 120 crore through an initial public offering (IPO) to use a majority of it for international expansion. Africa is one such destination where it plans to make a presence, especially in markets where Zain is present. “We expect to make Zain as one of our largest customers in Africa. We have a relationship with Bharti, and worked with them for 10 years,” said Vijay Sharma, managing director, One97 Communications. The company has already hired employees in Africa and is planning to scale up the team.
Indian and African markets are very similar, helping these companies acclimatise and grow easily. “Margins and costs in African markets are very comparable to those in the Indian market. More so, we can easily match consumer expectations in the market as value-added services market, like in India, are not very matured,” said Sharma.
African telecom markets also offer huge growth opportunities. Teledensity in many African countries is under 20 per cent. Many African economies are growing at a faster pace, as foreign institutional investments have increased sevenfold in the last five-six years. Also, a growing middle class and lower average age of the population indicate growth prospects for telecom operators and, thereby, services. “Bharti’s interests have made everyone take a relook at Africa. The African telecom market is a good story even otherwise,” said Alok Shende, principal analyst and co-founder, Ascentius Consulting.
Essar Telecom, too, has presence in Uganda and Congo after it acquired a 51 per cent stake in Warid’s operations in these countries. But Airtel, with its massive presence across countries, became the pull factor for companies to Africa.
Experts also point out that many of these vendors do not have to make huge investments to set up shop there.
VAS player Pyro Group, which is into core network activities, network optimisation services and mobile commerce, is also expanding its presence in Africa. It plans to invest $10 million for enhancing core network and creating more local resources over the next two years.
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