Mobile Point View by Paul Ruppert

One Year in my Blog Life: Keeping Score at Mobile Point View

Readers from 128 Countries

Journalistic cycles  are often driven by calender milestones so today I celebrate my first anniversary as a blogger--albeit it slightly tardy. 

I started Mobile Point View in April of 2007 primarily to frame and define my "personal brand", project and shape awareness of my industry perspective, e.g. my "thought leadership", and keep my eye  focused on the mobile industry and global business trends with a discipline to discuss my views.

Along the journey I found it also fed internal motivations such as a love/hate relationship with writting, and my wonderlust for "Adventure Roads" and "Adventure Capitalism." Plus, it feeds my spirit to learn more about other cultures and keep my skills sharp in making connections--both technical and human.  I've been told I've got a combinatorial world view which my blogging reflects, being part travelogue, wireless industry plus global commerce analysis, and my passionate interest in high growth markets such as China, Africa, and the Middle East.

Recognitions & Connections

An unexpected turn along the path has been the recognition of my views by technoscenti like Om Malik of DigOm, Gerry Purdee of Forrester Research and mobilista Rudy De Waele. A surprising approach by Mobile Messaging 2.0 to contribute to that corporate sponsored blog has led to additional "thought leadership" and recently my being tapped to be the Managing Editor of Mobile Messaging 2.0. So now I'm a "professional" journalist, meaning my meanderings drive revenue.

Another unexpected consequence of having a cyberspace billboard has been the people I've become acquainted with--gratifyingly in other countries, who have graciously shared their time, interests and expertise with me by reaching out and establishing a connection, especially Lars in Tokyo, Ben in Beijing, Mikki in Hong Kong, Tarek in Egypt, Feng in Beijing, James in London, and Mohammed in Iraq. Reflecting a modicum of success, the connectedness of the mobile industry and power of the internet, the number of others who I have met at conferences who entered a conversation with "I know you, I've read your blog!" has been surprising and energizing.

What I'm most proud of is being relevant and interesting to readers from 128 countries.   

After a year of blogging, I've got a slurry of mixed metrics on total visits (over 100,000 ), page views, time on blog, google juice, etc., but the one which I'm most proud of is the reflection of my reach and global view point.   Sidebar: Visit: Global Point View Ltd. my umbrella company which I consult under while looking for my next industry job. Having readers from so many countries reflects my purpose, passion and pursuits to illuminate the power of the mobile industry and its fundamentally global characteristics. 

Interesting Quirks of Where My Readers Are 

Some interesting aspects of my readership include:  9,600 visits from readers in India, 900 visits from readers in Pakistan, 30 visits from readers in Myanmar, over 740 visits from readers in Iran, and 400 vistis from readers in Nepal. I've got one regular reader in Foggaret el Arab, in the dead middle of Algeria and a population of 4,300. The snowiest reader must be in Bathurst Inlet, Nunavut, Canada--probably someone visiting the Lodge.

I guess that reflects the power of the web, the strength of interest in mobile communications, and once in a while my ability to strike a chord which resonates with a variety of people in diverse international locations. 

Here's a tally of reader countries as of June 2008

A Year in the Blog Life
	Visitors from 128 Countires
Americas (25)	Europe (40)	Asia (26)	Middle East (11)	Africa (26)
US	UK	Australia	Afghanistan	Algeria
Barbados	Andorra	Bangladesh	Bahrain	Botswana
Bolivia	Aserbaijian	Brunei	Egypt	Cameroon
Brazil	Austria	Cambodia	Iran	Canary Islands
Canada	Azores	China	Iraq	Cote D'Ivoire
Cayman Islands	Belgium	Fiji	Israel	Djibouti
Chile	Bosnia	Guam	Jordan	Ethopia
Columbia	Bulgaria	Hong Kong	Kuwait	Gambia
Costa Rica	Czech Republic	India	Oman	Ghana
Dominican Republic	Denmark	Indonesia	Qatar	Libya
Ecuador	Estonia	Japan	UAE	Madagasacar
Grenada	Faeroe  Islands	Kazakhsatan	Yemen	Mali
Guatemala	Finland	Korea		Mauritius
Haiti	France	Laos		Moambique
Honduras	Georgia	Malaysia		Moldova
icaragua	Germany	Marutius		Morocco
Jamiaca	Gibraltar	Myanmar		Mutitania
Martinique	Greece	Nepal		Nigeria
Mexico	Iceland	New Zealand		S. Africa
Paraguay	Ireand	Pakistan		Senegal
Peru	Italy	Philippines		Sudan
Puerto Rico	Latvia	Singapore		Swaziland
St. Vincent	Lichtenstein	Taiwan		Tanzania
Trinidad	Lithuania	Tajikistan		Togo
Urguay	Luxemburg	Thailand		Tunisia
Venezuela	Macedonia	Uzbekistan		Uganda
	Mallorca	Vietnam		Zaire
	Malta
	Monaco
	Netherlands
	Norway
	Poland
	Portugal
	Romania
	Russia
	Serbia
	Spain
	Sweden
	Switzerland
	Turkey
	Ukraine

Emirate's Arabian Oryx closing on the Lion?

Etisalat eying South Africa's MTN

The saga surrounding the MTN acquisition continues with today's report that the UAE's Emirates Telecommunications (Etisalat) is the latest operator to be linked to activity surrounding the future of South Africa's MTN.

3 Suitors within a Week

"We are always looking for expansion in Africa," Reuters reports Etisalat chairman Mohammed Omran as telling reporters at the ITU Africa 2008 event in Cairo today. "We are evaluating MTN, among other companies." As we've been following this effort over the last two weeks with "Now the Dragon eyes the Lion" and "Poaching in Africa: Bharti's Hunting MTN"  and the kick off "India Eyes Africa: Bharti target's MTN" there are now 3 potential suitors, Bharti, China Mobile and Etisalat.

Government-owned Etisalat, which operates in 16 countries and has 51 million customers, has been on a four-year, US$5 billion spending spree, setting up mobile operations in Egypt and Saudi Arabia as well as buying a stake in a Pakistani unit. In December last year it said it would buy 16 percent of PT Excelcomindo Pratama Tbk to enter Indonesia, the world's fourth most populous country. It is also started an operator in Nigeria. Clearly this gulf based operation is leveraging it's wealth accrued during this oil and mobile-coms boom.

Meanwhile, Vodafone remains on the side lines and emphasizes it has no plans to make a bid for MTN, despite reports in the UK press over weekend to the contrary.

Arab & State Owned likely in South Africa?

Given the clear state ownership of Etisilat, I'm not sure that one of South Africa's crown economic jewels would be likely to fall into foreign state owned hands. After all MTN happens to be one of the six largest advertising spends in S. Africa, with estimates putting their branding efforts as close to $600 million. It's one thing to have a non-controlling interest, it is another to have outright ownership by a foreign state. Stay tuned. It continues to be interesting.

$17 billion off shore gets no respect in the US

Of course, I haven't seen a peep in any US media outlets mentioning a $17 billion acquisition in the mobile telecommunications space is about to come down. The closest I've seen is "Calling Across the Indian Ocean" a piece in this week's Economist, a British publication.

Poaching in Africa: Bharti's hunting MTN

Remember "India Eyes Africa" where I covered a possible takeover of MTN by Bharti?

Well, we've got market action in "the Bush"--both financial and commercial--indicating that MTN is in the cross hairs of Bharti.  Bharti, which operates India's Airtel as well as being a massive conglomerate, has a bid reported at US$19 billion for a 51 percent stake in the Johannesburg SA based MTN.

Shares in MTN surged to a two-and-a-half year high yesterday after both companies confirmed that an offer had been tabled following weeks of speculation. The bid, which reportedly includes US$12 billion in financing from investment banks Goldman Sachs and Standard Chartered, values MTN at US$37 billion.

India: The new source of Global Conglomerates--Is China on Deck?

If Bharti is successful, this would be the high water mark for an overseas acquisition by an Indian company. True to the stages of "M&A dance" Bharti continues to deny, issuing a statement yesterday relaying that "discussions are still at an early stage, are exploratory in nature and may or may not lead to any transaction."  Yea, right.  The champagne is already being chilled in the offices of speculators in London and Jo'burg. Did you buy MTN as a result of my last post? Obviously, we both should have!

Bloomberg is reporting any confirmation from Bharti could spark a bidding battle for MTN, citing a UBS report that suggests Vodafone, India's other industrial conglomerate Reliance and China Mobile, one of the highest market cap companies in the world, could ALL be interested in bidding for the operator--that would be the story of the year in the industry. Bloomberg also notes a report from Citigroup that claims that Singtel, which owns 30.5 percent of Bharti, may be "directly" involved in the MTN bid--I already covered that four days ago, gents...MTN has 68.2 million mobile subscribers covering 21 markets across Africa and the Middle East.  Bharti would be spending US$542.52 per sub in a region where the average ARPU (average revenue per user per month) is less than US$5.

Stay tuned. Only fools think that you can't make money in the low ARPU, high growth areas of Africa, and Bharti is not run by fools.

Speaking of fools, anyone besides me wondering why there are no American operators in this game of global investment and consolidation within the mobile industry? After all ATT's CEO stated earlier this year they wanted to expand internationally including India. Why not Africa? Oh, and don't forget T Mobile--from UberDeutchland--is looking at Sprint. And for that matter what would Verizon do with a GSM operator anywhere anyhow? Right. Don't hold your breath for the American operators.

The tanking dollar prohibits these big plays. Plus, the core American operators are too parochial to have a global vision, with most execs believing that the US market is big enough--of course that begs the question what about share value when the US reaches 100% mobile penetration in the next few years? Reverting back to classique Bell Head mentality. Takes a global vision, awareness of differences, creativity and a propensity for action to claim value around the globe these days. Seems the Indian operators have the fortitude for the fight....Look to see MTN falling into the hands of Bharti before the US Independence Day.

India Eyes Africa: Bharti targets MTN

India's Bharti Airtel is considering making a bid to acquire South Africa-based MTN Group, in a move that would be valued at around US$17 billion and make the Indian operator among the largest in the world according to the Financial Times.

Notwithstanding the usual posturing of such acquisitions---deny, announce, rejoice--Bharti's founder and chairman, Sunil Mittal, denied that the operator's board had met to look at making a formal approach for MTN, adding that no decision had been made. "We talk to people all the time and don't preclude anything," Mittal was quoted as saying. "I do not want to be compromised by ruling anything out for months." Akhil Gupta, joint managing director of Bharti added: "There is nothing on the table as of now."  Clearly, we're in deny phase.

Africa is where it's At!
Africa's mobile markets are ripe for international investors thanks to low penetration levels (24% against 30% across Africa), fast-growing population , and regulatory regimes encouraging competition. Analysts at Informa Telecoms and Media forecast that the market will reach 158 million mobile subscriptions by 2012 - a 78% growth.

In this context, international investors are entering the market aggressively, Middle Eastern groups invested in new licenses (Etisalat, Comium, HiTs Telecom, and Warid Telecom), and other operator groups like Bharti are making the region an integral part of the global expansion strategy. This is the case for Orange, which launched new operations in four countries in 2007/2008 (Central African Republic, and the three Guineas), and for Zain, whose Celtel operations in the regions are scheduled to re-brand to Zain by the end of 2008.

MTN has the largest footprint in the region's markets, including the three leading markets (Nigeria, Ghana and Ivory Coast) and an expanding portfolio of ISPs. It is no wonder then that the group is attracting the attention of outside investors looking for a way into one of the world's most promising telecommunications markets.

No Means Yes?
MTN has relayed in the past that it would be open to evaluate an offer from a global player, though it issued a vanilla statement that it "receives tentative approaches from time to time, which are always evaluated." It added that "the board of MTN has not received any specific proposal, and if and when there is anything specific to report, the market will be notified." I'm sure the bankers have been busy in the background especially given the credit crunch for such large transactions. If its in the public press then its on. These things are usually started via a phone call, not a formal offer.

MTN has a solid reputation in the operator community reflecting its ability to grow and profitably prosper in low ARPU markets in across Africa. MTN is an obvious target for major investors looking to increase their presence in high-growth emerging markets. MTN had a total subscription base of 68.2 million at end-1Q08, according to the operator, up from 58.6 million at end-4Q07, while Bharti is known to be eager to pursue an aggressive M&A strategy to spur growth and apply some of the growing capital and power accruing to global Indian brands. Any initial bid for MTN from Bharti would most likely be a partial tender offer for 51% of the group.

MTN by the Numbers
MTN, which has operations in 21 countries, is 76.9% publicly traded on the Johannesburg Stock Exchange, so Bharti or any other would-be buyer would have to make an offer to institutional and private investors to acquire a majority stake in the company. It has a market capitalization of US$33 billion, so a 51% stake in the company would cost US$16.83 billion at current values.

MTN's US$5.5 billion acquisition of Investcom in 2006 expanded its footprint outside South Africa, but many of the markets in which it operates have relatively low penetration rates, making it a prime candidate for an acquisition approach.

Bharti is benefiting from very strong growth. It had the second-highest number of net additions in 4Q07 in Asia Pacific, with 6.28 million, and India remains the world's fastest-growing country in terms of net adds, with 23.9 million in 4Q07, ahead of even China, which had 23.3 million.

To the Bankers Please
Standard and Chartered is reported to be advising Bharti on its options, and SingTel, which owns 35% of Bharti, is thought to be supportive of a bid for MTN.

MWC Podcast: Hawala Money & Mobile Remitances

   

For the past five hundred years "mobile" money transfers in the Islamic world were accomplished through the Hawala or Hundi.

The Hawala is an informal money transfer system with a huge network of money brokers which are primarily located in the Middle East, Africa and Asia.  The transaction takes place entirely on the honor system. The unique feature of the system is that no promissory instruments are exchanged between the hawala brokers. No records are produced of an individual's transactions, no records of individual users are kept; only a running tally of the amount owed one broker by the other. Settlements of debts between hawala brokers can take a variety of forms, and need not be direct cash transactions.

If you think mobile remittances are a modern phenomenon, think again. Modern Mobile remittances are but one of several such systems. Another well known example is the Fei Chien, meaning flying money system indigenous to China, also used around the world. These systems are often referred to as 'underground banking', which isn't entirely accurate since they operate in the open with complete legitimacy (sometimes the ends are illegal), and often these services are heavily advertised within immigrant communities.

Jumping to Mobile transactions of the 21st Century

Mi-Pay Ltd. was established in 2003 by executives who stepped out of Logica, the SMSc and messaging innovator. Originally it had a focus on outsourced pre-paid top off services for mobile operators which enables consumers to safely and securely add to their acounts from their handsets. Mi-Pay has initiated a pre-paid recharge solution for mobile operators concentrating on Europe and the Middle East.  It is looking to help modernize the traditional Hawala/flying money system by providing the mobile payments processing solutions to network operators interested in money transfer services such as remittances. Mi-Pay has been sharpening their technology over the last three years and is now bringing the solution to market focusing on the emerging markets of the Islamic crescent of central Asia, the Middle East, Africa and Latin America. They currently provide the payments switch to the new market entrant in Dubai, du.

Learn more about Mi-Pay and listen to my interview with Mi-Pay CTO, Simon Cavell at the Mobile World Congress. (8 min) 

IRAQNA Aquired by Zain

As I predicted in my post of August 31, 2007, "Hunting Iraqi Operators", IRAQNA the  Orascom Iraq-based mobile operator has been acquired by ZAIN for US$ 1.2 bn. ZAIN is formerly known as MTC (Mobile Telecommunications Company).   

I've covered Iraqna's service build ( see "Untold Text Stories" ) often since writing this blog, and I'm quite pleased for the success of those executives I worked with to provide Iraqna a global SMS capability.

In August 2007, Zain's existing Iraq-based subsidiary, MTC-Atheer, made a successful bid of $1.25bn to secure one of three 15-year nationwide licenses awarded by the Iraqi Communication and Media Commission.

The Iraqna acquisition will consolidate MTC-Atheer's position in Iraq creating a solid operating base of  more than seven million customers. Mobile penetration in Iraq currently stands at about 33 per cent so there is plenty of room for growth in the Middle East's second most populous country.

ZAIN's Building a Regional Mobile Conglomerate

Commenting on the transaction, Dr. Saad Al Barrak, managing director-deputy chairman of Zain Group, stated:  "This investment reinforces and demonstrates our commitment to the future prosperity of Iraq while complementing Zain's aspirations of becoming a top ten global mobile operator by 2011." operations across the Middle East and Africa now serving more than 43 million customers.  Zain has operations now in Kuwait, Jordan, Bahrain, Iraq, Lebanon, Sudan, Saudi Arabia, Kenya, Tanzania, Uganda, Dem. Republic of Congo, Rep. of Congo, and Gabon.

The expanded MTC-Atheer operation will have the second largest customer base in the Zain Group's 22 operations.

The "NewCo" operator's network will span over 15,000 sq km, covering all the major populated areas of Iraq and the network will be further expanded to cover all of Iraq in the future. Recently MTC-Atheer extended its services to Kirkuk in the north of Iraq. The enhanced MTC-Atheer operation in Iraq will be re-branded Zain in early 2008.

As an aside, I wonder if any of the western media will pick up on the "good" news story of how this fledgling operation built out a substantial business providing a needed service in the very difficult environment of war torn country?  Let alone a US$ 1.2 billion deal in economy that is supposed to be going to hell in a hand basket? It's testament to the hard working Iraqi employees and management of Iraqna that they were able to build and create such a valuation for their hard fought efforts. But don't hold your breath on the media picking this up....

So, What do you think of the acquisition of Iraqna? Does it positions Zain positively in the Middle East mobile market? What about Orascom selling off the asset, will it hurt them or help them? Do think the Middle East mobile market is over hyped or just taking off?

I am very proud to have readers in Iraq, Jordan, Israel, Egypt, Saudi Arabia, Yemen, UAE, Qatar, Bahrain, Afghanistan and Iran in the region. Certainly some of you have insight that you would like to share with the rest of the MPV community? Let's start a conversation here, just to indicate to me that the Middle East mobile segment is as interesting to you as it is to me.

Hunting Iraqi Operators

Consolidation in a Mobile Growth Market

The growth and economic contributions the Iraqi mobile operators have contributed to that nation is astounding. Reflective of the fast value they have created some consolidation of the market is being driven as others are looking to aquire and invest in Iraq's mobile segment, meanwhile the price of spectrum has exceeded expectations.

News out of the region indicate the CEO of Korek, the Kurdish mobile operator, is in talks with Iraqna's parent, Egypt's Orascom, to buy or create a joint venture between Korek and Iraqna. Orascom, which operates Iraqna through the license it purchased in 2003, recently pulled out of the current spectrum auction because the price was too dear. Indicating it would prefer to either sell its assets in Iraq or enter a joint venture with one of the winning bidders. Each license was worth $1.25 billion. Kuwait's Mobile Telecommunications (MTC) and AsiaCell, an affiliate of Qatar Telecommunications, won the remaining two 15-year licenses. MTC and AsiaCell have also been operating in Iraq since 2003. Korek is the only company that didn't have a national network. Iraqna currently has over 3 million subsribers.

Kurdish CEO Confirms it

"We are still holding talks with Orascom to buy its Iraqna unit or to enter a joint venture," said Korek Chairman and Chief Executive Sirwan Mustafa. Orascom set the price of Iraqna, at some US$1.5 billion, said Mustafa . "We are evaluating how much Iraqna assets are worth and see what we will decide," adding that his company would decide in a week from now after meeting with Orascom's officials. Mustafa relayed he was also negotiating with other international companies to enter a joint venture, specifically citing MTN out of South Africa and Alfa out of Lebanon.

Korek, which runs a network in Iraq's Kurdish northern region, plans to initially invest some $150 million to buy new equipment to start operations in Iraq, Mustafa concluded.

Untold Text Stories: SMS in IRAQ

One of the untold text stories I've been privy to is the amount of SMS that flows out of Iraq into destinations around the world and the success of texting in the Iraqi mobile market. Untold, since in 2005 I was being interviewed by FORTUNE and The Wall Street Journal on the market dynamics of SMS into and out of Iraq. Why the stories were eventually “spiked" is pure speculation since at the time the drive by media swarmed around the difficulty of the war and it's influencing the mid-term US Congressional elections. Explanations from both reporters were never forthcoming.

This was a "good news" story. It reflected the power of messaging to immediately connect far off families and friends with those on the frontline of battle, as well as the developing story of how telephony poor Iraq was able to swiftly launch mobile communications for its citizens. It illuminated how the natural need to touch with text blossomed in a country even in a very difficult commercial environment.

Here's the story. Back then I was responsible for the international P&L for the globe's leading SMS services provider to mobile operators. My job was to enable and harvest the world's SMS operator traffic flows. As part of a weekly call with my global staff I reviewed traffic patterns into and out of over 300+ mobile operators in 140 countries. In the fall of 2005 an interesting pattern caught my eye. 

At the point of the 2003 invasion fixed line density in Iraq was among the lowest in the world with only 3% of the country's 25 million people having access to a telephone line. Soon after Sadaam fell, the Iraq Development Program issued 3 mobile operator licenses to Iraqna (means “our Iraq”) owned by Egypt's Orascom, Atheer MTC of Kuwait, and Asiacell, part of the Middle Eastern mobile conglomerate Wataniya. A considerable investment had been made by these companies, estimated at the time to be US$1.5 billion within 12 months, as well as an additional $250 million by Iraq's Ministry of Communications. 

Mobile communications was the fastest growing sector in Iraq, and had become one of the "most significant markets" according to Ali al-Dahwi, CEO of MTC's Atheer. From all the numbers, mobile telephones were the only thing that was working well there, even in the face of significant security challenges including kidnapped employees, towers bombed, storefronts shot up and a huge security budget—relayed to me by an Iraqna executive to be up to four guards for each employee. There obviously was money to be made since they were still hanging around.

They made the right call. Demand for mobile phones began to soar. By 2005 Iraq’s nascent mobile market was already half the size of Egypt’s, despite Iraq’s population being only one-third of the size, and Egypt having a 10 year start.

I had successfully landed Iraqna as a customer when it launched since it was owned by Egypt’s Orascom which was already one of my customers. Upon initially launching we provided both in-country and international SMS interoperability for the fledgling Iraqna, and therefore had a complete picture of it’s message flows. It was astounding.

Iraq became our fastest growing SMS market in the Middle East. With over 1.5 million subscribers, over 20% of the messaging traffic was flowing into and from the US. At one point in the second month it spiked at over 40% of all SMS traffic. 20,000 SMS messages a day were being exchanged between the US and Iraq. In its first quarter overall growth was 400%. By January of 2006 Iraq’s traffic to the US was 22% of its total and was running at 1.2 million messages a month, or 40,000 SMS a day. At the time, the average cost of a mobile voice call to the US was 25 US cents per minute. An SMS cost 12 cents per message. Although the operators did not have a wide range of connectivity then the Top 10 SMS destinations for Iraq were:   

1) US
2) Syria
3) Yemen
4) Fiji
5) UK
6) Palestine
7) Macedonia
8) Germany
9) Sudan
10) Thailand

Iraq was in the top 10 originations and destinations for US operators by January 2006:

Into the US                                  From US
Mexico                                        Mexico
Philippines                                   Philippines
UK                                                UK
Ireland                                         Germany
Germany                                      Australia
New Zealand                                 Ireland
Ecuador                                        New Zealand
Australia                                       China
Iraq                                              Iraq

The question that goes begging is who was driving all this traffic between the Iraqi operators and these destinations? Here’s an educated guess:
1) US Military members
2) Coalition Forces
3) Foreign Workers in Iraq
4) Contractors
5) US Government
6) NGOs in Iraq
7) Iraqis to friends and family abroad
8) Commercially driven messages—e.g., “call me at X so we can relay the details”
9) Insurgent/terrorist SMS communications. If they are calling the US and using the web, they are utilizing SMS text, too.  [Q: If the US National Security Agency and the UK’s MI-6 can monitor voice calls, can they monitor SMS? A: Absolutely, they can.]

Today, Iraq has become an ignored mobile success story. From 2005 to 2007 it has had a growth rate over 600% going from 1.4 million subscribers to over 9 million with a third of its population now benefiting from direct access to telecommunications. Mobile market privatization in Iraq has catapulted it to being the second most competitive market in the Middle East according The Arab Advisors group.  Iraqna alone is expected to reap over US$500 million in revenues this year. Not a bad four year track record.                                   Now its a story told.