Structural adjustment in the Latin American and African mobile sectors

In recent times, there has been much discussion about structural changes taking place on the mobile front in Europe and the USA but rather little on developments elsewhere. However, it is in Latin America and Africa where the structure of the mobile sector has recently been undergoing the most rapid and unprecedented change. This paper sets out to explain what has happened in each case covering the period to end-2005, to explain the underlying rationale and to seek finally to answer the question whether there is a common pattern in both cases or whether they are essentially independent. Many more countries are involved in the African case and hence, unsurprisingly, many more operators have been involved as both buyers and sellers. However, in both cases there was an established status quo by the early part of the decade. In Latin America, there were four fairly dominant players--América Móvil, BellSouth, Telecom Italia and Telefónica--while in Africa there were five--MTN, Orascom, Vivendi Universal, Vodacom and Vodafone. What was common to both continents was a colonial heritage. One other common feature was the presence of investors that were based outside the continent yet heavily committed to developing markets. There have been clear differences in the protagonists in the two restructurings. In the case of Latin America the process has not involved new entrants. By way of contrast, although certain domestic African operators are 'on the march', by far the most significant feature is the appearance of non-African operators and in particular those from the Middle East such as Etisalat and MTC. These two are behaving very aggressively and see their entry into Africa as a key plank in their quest for (a form of) world domination. Indigenous operators such as MTN and Vodacom are evidently not prepared to fight their corner to the same extent. Whether the very high cost of recent licences and stakes will come back to haunt their purchasers is a moot point, but what is evident is that these kinds of prices are deterring long-standing African investors.