The past few years have forced mobile carriers to change tactics on many fronts. During the telecom boom, having a global presence seemed essential. But wireless carriers recently have been selling stakes in operations outside their core markets and honing in on their main businesses. Most sales have centered on minority stakes, while carriers have held onto most majority shareholdings.
Both BellSouth and AT&T Wireless sold stakes in mobile operations earlier this month. BellSouth sold its stake in Denmark’s Sonofon for about $600 million. BellSouth in 2002 sold its stake in Dutch operator KPN Telecom, giving up its grand plans for a European play, to focus on its North and Latin American investments.
AT&T Wireless recently offloaded its stake in an Indian operator, BPL Mobile, although it still is part owner of another Indian GSM carrier, Idea Cellular. AT&T Wireless and Verizon Communications in June sold their combined stake in Eurotel Praha, a mobile carrier in the Czech Republic. Verizon, along with parent company Vodafone Group, also earlier this year sold its stake in Mexican mobile carrier Iusacell. Even Vodafone, which is the closest to a true global wireless carrier, is getting into the divestiture game, with a goal of remaining in only those markets in which it is the majority shareholder.
When things pick up again in the wireless industry, will operators be at a disadvantage for not having a global play? Most carriers think not. However, carriers are still doing whatever they can to strengthen their footprints in their core regional markets.
Two separate groups of carriers in Europe have banded together to offer seamless roaming and services in defense of Vodafone’s much stronger footprint there. BellSouth has chosen to focus on its Latin American properties and has been expanding coverage and services in the region, boosting its presence and profitability.
But many developing markets around the globe are just beginning to demonstrate their potential. If 2004 brings better fortunes to wireless players, some may consider branching out again to try to capture the elusive pot of gold. However, it’s unlikely the merger-and-acquisition frenzy of the late 1990s and 2000 will repeat itself anytime soon.
And operators will undoubtedly heed situations like Western Wireless in Cote d’Ivoire, where a local carrier in which Western Wireless holds a stake was forced to shut down its operations due to an unstable government allowing the occupation of the carrier’s headquarters by local insurgents for a week. Western Wireless is suing the government there, which originally looked like a prime market for a new wireless operation due to its low mobile penetration rate and previous stability, for $54 million.
Any new global acquisition climate will likely be a cautious, pragmatic one.
