Will we see international buying sprees?
Are we witnessing a mood swing among operators when it comes to global consolidation? It was in 2002 when major operators primarily in Europe were experiencing hangovers after their extravagant buying sprees in the late 1990s and 2000. Global operators such as Vodafone, Deutsche Telekom and France Telecom took billions in write-downs while U.S. operators retreated from their international holdings--many in Latin America--selling off their stakes as they faced financial pressure at home. ÂÂÂ
AT&T was one of those operators that sold off its international assets during the last five years as it shored up its U.S. acquisitions. The operator is now looking to acquire companies abroad to offer telecom services around the world to consumers and business users. AT&T particularly has its sights on India, where operators are reporting leading growth--about 6 million new subscribers a month. Vodafone has already gotten its hands on an $11.1 billion stake in India's Hutchison Essar.
Indeed, it appears this next round of global expansion fever will focus on emerging markets, where growth is exploding. The demand for wireless services in India, China, Vietnam, Saudi Arabia, Dubai, Qatar and Kuwait is increasing as multinational corporations stationed there need advanced data and voice services, and some regulatory environments begin to welcome foreign investors.
Still, we won't witness the high-flying deals we saw in the late 1990s, when financiers welcomed blind consolidation for the sake of growth. Vodafone was able to leverage its fat stock price then as currency to consummate some of the biggest corporate mergers in history. Operators are being rational. I suspect that is why Millicom International, which owns operations in some 16 developing countries, hasn't been snapped up yet. China Mobile was supposed to buy the company last year, but the deal fell apart when the two companies couldn't agree on a final price tag. China Mobile was willing to pay $5.3 billion for Millicom.
Interestingly, WiMAX could prove to be the vehicle that gets operators in the international door. Not only are players in developing countries looking to deploy WiMAX, but operators in more developed countries such as Taiwan are deploying networks too. You can bet they all will be looking for some outside money to help build out their networks. -Lynnette