Emerging economies good for global carriers

11 January 2012 | Guy Matthews


Emerging economies are good news for global carriers looking for business growth – and global carriers are good news for emerging economies looking for better international connectivity.

If a big multinational telco name wants to land a cable on your shore, or bid for one of your mobile licences, it bestows something a little more elusive into the bargain – a soupcon of prestige and recognition, and a degree of distance from the tag of ‘poor and struggling nation’.

It is over a decade since American writer Thomas Friedman’s made his famous observation that no two countries that both have McDonald’s restaurants have fought a war against each other – since each got its McDonald’s at any rate.

Friedman’s point, a serious one if perhaps slightly facetiously made, is that globalisation tends to endow peace through shared commercial interest, and the fostering of dialogue as the primary solution to disagreements.

It is worth distinguishing here between emerging economies that everyone wants a piece of, and those that have issues that make them a dubious proposition for investors despite the rewards that might lie within. Malaysian mobile operator Axiata has just posted plans to invest $1.4 billion over the coming year in upgrading network assets across its global portfolio, except for Iran which it is withdrawing from ‘to focus on growing core markets’. Big things are planned for Indonesia, Sri Lanka, Bangladesh and Cambodia. Iran though is clearly too hot to handle, and Axiata wants a buyer for its 49% stake in cellco MTCE. Chinese vendor Huawei, not exactly a stranger to untried and untested new market opportunities, has also decided to scale back its business in Iran where it works with more than one telecoms operator. From now on it will be ‘limiting business activities to existing customers’ in Iran due to what it calls an ‘increasingly complex situation’. Companies don’t want to be associated, if at all possible, with repressive regimes that crack down on their own citizens’ desire for democracy. Nor, generally speaking, do governments. In September the EU announced it will no longer be permitting business with broadcaster Syriatel, following Syria’s governmental attacks on protestors. Syria off its own bat has indefinitely shelved the auction of a third mobile license in the country. Don’t expect AT&T to be building a Damascus POP any time soon.

Guy Matthews can be contacted at: guy@transom-enterprises.co.uk