$30bn of telecoms assets likely to be sold

Up to US$30 billion (Dh110.18bn) worth of telecommunications assets in the Middle East and Africa could be sold over the next three years, a management consultancy says. The recent sale of Zain's African assets to the Indian operator Bharti Airtel for $9bn is a leading indicator that merger and acquisition activity in the region's telecoms sector will bounce back from last year's economic downturn.

Zoran Vasiljev, the managing director for the Dubai office of Value Partners, said most acquisitions would be driven by telecoms looking to drive down operating costs while diversifying revenues away from domestic operations. "The time of people going around and planting flags and acquiring assets or setting up operations just to get a footprint grown out there is not the way to do it anymore," said Mr Vasiljev.

"Now it's to define a strategic footprint, which means finding areas that offer value and can learn from the current set of operations that they have." Mr Vasiljev said the more assets a company controlled, the more bargaining power it had when upgrading infrastructure. There may also be a new wave of "convergence", where media and content providers form strategic partnerships to use networks built and maintained by telecoms operators, he said.

"Operators are realising that data on their networks are being consumed by content providers," Mr Vasiljev said. "Therefore, instead of being a dumb pipe or a smart pipe, we see operators either acquiring content companies or entering joint ventures with them to make them part of that product mix. "We have already seen some bold moves from the region's operators who have brought in certain executives from the media side and set them up as a subsidiary for the time being."

Mr Vasiljev said the $30bn was a conservative amount, mainly taking into account the value of the operators that are known to be in talks over deals and their assets. "I'm sure that this could actually be even larger if we see more consolidation in the next few years," he said. @Email:[e-mail]