Mobile Point View by Paul Ruppert

Oprah Thinks Pink

Oprah Winfrey gave the commencement address on Sunday at Stanford University. She distributed Daniel Pink's "A Whole New Mind" along with Eckhart Tolles' "A New Earth."

Back in November I read Pink's book and wrote a book review on Amazon that you can read here.      Quick Review: The future belongs to those who can craft symphonies from unrelated categories (as opposed to those who just analyze alone), who have narrative aptitude for story (instead of who just read power point slides), and who have empathy to solidify relationships (as opposed to transactional engagements)--they will be the masters of the this Conceptual Age.

Well worth the time, great afternoon read on the beach or in the hammock.

MTN Deals OFF!: Bharti & Switch in SA

According to Reuter's Bharti has withdrawn from the discussions with MT over the weekend. Shares in Bharti rose 4.2 percent to 872 rupees, their highest since May 6, when they slumped more than 5 percent on news that Bharti was in talks with MTN. So, Bharti is off the table. Cue #2 in India, Reliance enters the picture.

South Africa's MTN is now reporting that it has initiated talks with the #2 Indian mobile operator Reliance Communications (RLCM.BO: Quote, Profile, Research) that could create a $66 billion emerging markets telecoms group if the two companies merge.

A combination of MTN, valued at $38 billion at Friday's close, and Reliance, valued at $28 billion, would create a top ten global industry player to rival Japan's NTT DoCoMo in market value. In terms of subscribers, a merged group would fall just below Deutsche Telekom -- as the world's seventh largest mobile opertor conglomerate. Sources indicate that Reliance would put in play a different structure than the aforementioned Bharti deal. Finacial wags and analysts had speculated that Bharti was eyeing a 51 percent stake in MTN and Bharti said it had pulled out of talks after the South African firm suggested it become an MTN subsidiary, essentially the prey transforming the predator in this play.

Shares in Reliance immediately fell as the markets displayed worry over the costs of a deal while MTN stock fell 7.6%. It was expected that the Bharti deal drove  speculation over the potential premium from a Bharti buyout. MTN is seeking new markets outside Africa and the Middle East and will likely push to retain its brand and culture.

"Whatever the shape of the company moving forward, there is little doubt that the retention of the MTN brand and culture would be two of the most important aspects executive management and shareholders should ensure," Frost & Sullivan analyst Lindsey Mc Donald said.

Reliance Communications and MTN said earlier that the two groups had entered into exclusive talks about potentially combining their businesses. A 45-day exclusivity period will be in force, during which neither can talk to any other entity, so the speculation over Vodafone or China Mobile is now mute. Reliance Communications Chairman Anil Ambani, one of India's richest men, said a deal with MTN could "provide investors, customers and the people of both companies a global platform for exponential growth".

Cobra brings down the Rhino?

MTN had 68.2 million subscribers as of March, compared with Reliance Communications' 48 million. "Reliance Communications is smaller than MTN, and lacks the financial muscle for a takeover, but it is not going to want to be a subsidiary, either," said Ravi Dodhia, a telecoms analyst at KR Choksey Securities in the Reuters piece. Speculation centers on whether the two firms were likely to create a new company with MTN taking a 51 percent stake.

"If MTN is looking to remain listed on the Johannesburg Stock Exchange and remain a South African company and be the aggressor in this deals, having this sort of exclusivity says to everyone else: 'You guys don't approach us, don't bother, we are not looking to be acquired'," Ambekar said. Harit Shah at India's Angel Broking, said Reliance and MTN might swap shares, as the foreign holding in Reliance Communications was considerably lower than in Bharti Airtel, a factor that was seen as a possible roadblock for Bharti's attempted deal.

Foreign ownership of Indian telecom firms is capped at 74 percent, and Bharti is 30.5 percent owned by Singapore Telecommunications.Shares in Reliance Communications, fell 5.7 percent to their lowest since May 12 while in Johannesburg, shares in MTN fell as 7.6 percent to 145.11 rand, their lowest since April 30.

Looks like the financial markets are disappointed that MTN has called off its talks with Bharti. Analysts had speculated that Bharti Airtel was engineering a merger that would value MTN at up to $50 billion.

Recall that last year, Bharti it lost the $11 billion race for majority control of India's third-largest mobile provider to Vodafone , but has made several smaller overseas acquisitions, including a UK-based WiMax operator of 4G services. India's wireless market grew 25-fold between 2002-07, ringing up record profits for telecom firms, but that growth is expected to slow as the percentage of the population with a mobile phone tops 40 percent by 2010 from 22 percent now.

In contrast, MTN is present in some of the world's most lucrative markets, such as Nigeria, Cameroon, Ghana, Zambia and Uganda, and has said it is keen to pursue more expansion opportunities in emerging markets.

Stay tuned.

China Relief: Here's Hao (How) You Can Help

After yesterday's Chinese quake-poem post I want to help guide informed readers to take action and help those in need in China.

With thanks to Ryan McLaughlin a friend who runs the extremely helpful "Lost Loawai" website covering China and Ex-pats plus the "Hao Hao Report" which compiles great web content on China, here's a more Asian centric group of relief organizations. Note you can text your contribution directly through China Mobile's Text contribution service. A great idea. 

Use the following information so that in your small way you can give and help. 

Red Cross Society of China

The Red Cross has set up a bank account for donations that will go directly to help the victims. Please use the following account information to give whatever amount you can to help. 

In China

RMB Account: 0200001009014413252
Address: The Industrial and Commercial Bank of China, Beijing Dongsinan Branch
Foreign Currency: 7112111482600000209
Address: CITIC Bank , Jiuxianqiao Branch

If Overseas:

If you are outside of China, but would still like to offer some support, you can deposit US dollars into the following account:

US Dollar Account: 7112111482600000209
China CITIC Bank Beijing, Jiuxianqiao Branch
C&W Tower. No.14,
Jiuxianqiao Street, Chaoyang District
Beijing, China
Zip Code: 100016
Swift Code：CIBKCNBJ100
TEL: 86-10-64319780

Heart to Heart

Heart to Heart International is a global humanitarian organization that inspires, empowers and mobilizes individuals to serve the needs of the poor in their communities and around the world. They accomplish this mission through partnerships that promote health; deliver resources, education and hope; and provide opportunities for meaningful service.

The Heart to Heart team in China mobilized for action shortly after the magnitude-7.8 earthquake struck northwest of Chengdu, where their office and clinic are located. Their medical director and staff were onsite providing medical and direct patient care in support of local relief efforts.

The organization has a number of ways you can donate - either through bank deposit, or directly online. Please see their donation page for details. The Web site also includes an excellent donor guide to appropriate disaster giving, and information on assembling care kits. 

Jet Li's One Foundation

Another way to donate is through Kung Fu master actor, Jet Li's One Foundation. The site has options to pay by various online methods (including PayPal) with all proceeds going to the Red Cross Society of China.

China Mobile - donate through SMS

China Mobile has set up an earthquake relief fund. To donate via your mobile phone, simply send a text message to the telephone number ‘10699988’, writing the number amount you would like to donate (from 1RMB to 30RMB) in the body of the text. The money will be deducted from your phone bill or prepaid card.

Other Means for different Means

If none of these donation methods suit your particular situation, definitely check out CNReviews' China Earthquake Donation guide. The blog master Elliot Ng is continually seeking additional ways you can donate. Check it out.

Add a badge to your blog/site  [Look Up and to the Right]

If you want to help spread the word about how people can help with donations for disaster relief you can use the following code badge for your website. Note, I've placed it on Mobile Point View. You can do the same for yours. 

     THE CODE:       href="http://www.lostlaowai.com/china-earthquake-how-you-can-help" title="China Quake Relief"><img src="http://www.lostlaowai.com/images/china-quake-donate.png" alt="China Quake Donation" width="200px" height="100px" border="0" /></a>

If you know of any additional ways in which help can be offered to the people of Sichuan,  China please please send me a note and I'll include it here.

The Road to Heaven is too Dark

I write early in the morning--right now it is 05:18 am, the beginning of a glorious spring day in Washington DC. The sky is turquoise, with lingering licks of darkness as the sun begins to rise. The Canadian geese are aflight towards the lake down the street. The blackbirds are cackling. Clearly the start of a great day to taste the wonder of life.

In reading my overnight China traffic, I came across this touching poem of a mother and child's final journey. Sorrow. Grief. Joy and memory all bundled together. As a parent it gives pause as to how wrenching such loss is for the many Chinese mothers and fathers who have lost their "little princes and princesses." Bitter sweet, drink it in and savor it.

It may be trite but such scale tragedy places perspective on that which matters most through this tenuous earthly journey: family, friends, heart and love. If you are action oriented, Click >here< for a list of relief organizations that are providing on the ground assistance to the Chinese rescue, recovery, relief and rebuilding efforts.

孩子     Child

快        Hurry up
抓紧妈妈的手           Tightly hold your Mom’s hand
去天堂的路        The road to heaven

太黑了                is too dark

妈妈怕你            Mom is afraid that

碰了头               you hit your head
快                     Hurry up
抓紧妈妈的手               Tightly hold your Mom’s hand
让妈妈陪你走      Let Mom keep you company
妈妈               Mom

怕           I am afraid
天堂的路             The road to heaven

太黑        is too dark
我看不见你的手        I cannot see your hand

自从        since

倒塌的墙         the wall collapsed
把阳光夺走     it took the sun light away
我再也看不见      I cannot see

你柔情的眸          your lovely eyes again
孩子            Child

你走吧        You can go
前面的路    the road in front of you

再也没有忧愁        has no sorrow any more
没有读不完的课本             there are no books that you cannot finish reading
和爸爸的拳头         and your father’s touch of his hand 

你要记住         you have to remember

我和爸爸的摸样         my face and your father’s face
来生还要一起走     let’s finish walking this road together in our next life
妈妈                 Mom

别担忧           do not worry
天堂的路有些挤             the road to heaven is a bit crowded
有很多同学朋友          I have a lot classmates and friends here 

我们说            we all say
不哭                                         don’t cry
哪一个人的妈妈都是我们的妈妈       anyone’s Mom is our Mom
哪一个孩子都是妈妈的孩子          any child is Mom’s child
没有我的日子                         the days without me
你把爱给活的孩子吧         give your love to the children alive
妈妈                        Mom
你别哭               don’t cry

泪光照亮不了     tears cannot light up the road

我们的路            our road
让我们自己         let us

慢慢的走             walk slowly
妈妈                  Mom
我会记住你和爸爸的模样      I will remember your face and father’s face

记住我们的约定          remember our appointment

来生一起走                 of walking together in our next life

Internet Tales: China vs The West & Rest

10 Ways the Chinese Internet is Different

In the course of searching for interesting & different content for Mobile Point View I sometimes find a jewel amongst the rocks. Such is the case with Mobiz (strapline: Trends and Opportunities in Mobile and Internet Space in China and Rest of the World), a blog written by Nokia Executive and wireless veteran Alvin Foo. Based in China, he has a nice balance of personal stories mixed in with solid analysis of mobile trends and technology initiatives in China. He's a pathfinder having blogged since 2004. I wanted to share Alvin's newest post "10 Ways the Chinese Internet is Different" for my global readers, as well as my own comments on each. Drop by Alvin's Mobiz & edify on the ways of China.

1. Its slower
Thanks to the Great Firewall, accessing the internet especially websites residing outside China can be a real pain.   Tell me about it. My friends in China keep advising me that MobilePointView sometimes is accessible and sometimes not. Notwithstanding the fact that I've never written a cross word about China!! There are many times I'd rather be there with 10% economic growth rate than here in the US where mobile is hardly cutting edge!  But what about Mobile access to the web, how's that compared to the west--same same. With most Chinese now accessing the web via mobile, does it really matter how fast a tethered connection is?

2. Its monitored. The Chinese authorities monitor all traffic going in and out of China.
Well, so it seems is the Australian web soon. Monitoring may not be all that bad given below. Yet again, read above and it makes you take pause. Readers, what's your view ?

3. Access to foreign Web sites is limited: The Chinese government uses four mechanisms -- DNS blocking, reset commands, URL keyword blocking and content scanning to prevent Internet users in the country from reaching blacklisted Web sites or content.  I've heard there are also readers pouring over the internet, much like massive public works projects used to be built by hand and hordes of workers. Any truth to that, or is it "geopolitical myth making?"

4. Blackouts are common
If the Chinese government finds that a user has downloaded forbidden content, it breaks the connection and prohibits the user from establishing communications with the site. These blackouts can last anywhere from two minutes to an hour. Umm, I'm also advised by a student who used to work for me that her dorm electricity is turned off at 11:00 pm every night. When do you get to study then?

5. Its censored.The authority employs thousand of people to go through content and censor whatever they find sensitive. Ah, see item 2 question.

6. There's less porn: The Chinese government justifies its Internet monitoring efforts by telling the public that it is keeping online information "wholesome" and free of threats such as sexual predators. Online pornography is not as pervasive in China, and users are less likely to stumble upon it. Good.

7. It's safer. Malicious activity including phishing scams, bots and zombies is less common in China than in the United States. China represented 7% of the Internet's malicious activity, while the United States represented 31% during the second half of 2007. One rationale for the Chinese Internet monitoring system is to keep hackers at bay. Seems sensible.

8. There's less spam. China produces 4% of the world's spam, while the United States is the origin for 42% of all unsolicited e-mail. China decreased its spam volume by 131% in the second half of 2007, largely by reducing the number of bot-infested computers. Here, too. Seems sensible.

9. It's based on IPv6. The China Next Generation Internet is an IPv6 backbone that the Chinese government is using as a testbed to develop IPv6 services, including distance learning and telemedicine. IPv6 is an upgrade to the Internet's main communications protocol that features enough IP addresses for the Chinese population. I'm curious whether IPv6 is a Chinese initiated technical upgrade. Might be reflective of industrial policy and strategy. If China adopts a standard, it is now at the point of rightfully effecting global standards to adhere. Nothing new here, others have tried it, e.g., PHS out of Japan, CDMA out of the US, etc.

10. Its growing faster. The Chinese domain .cn are growing much faster than any domain in the world. Dot cn grew by 399% than the 24% year on year for .com and .net. WOW!  Two words: Head East.

Thanks for the informative post Alvin.

Velti Invests in CASEE & Chinese Mobile Marketing

Velti Maneuvers into China's Mobile Marketing

Chinese mobile advertising startup CASEE has closed an investment from London-based mobile marketing company Velti plc. The investment was worth up to $6 million, according to the announcement from Velti. CASEE operates an on line mobile advertising marketplace at CASEE.cn  Riding on the success of AdMob neutral off-deck posture, some have characterized CASEE as the AdMob of China. Here's the value proposition: Wireless application protocol (WAP) site operators go to CASEE and sign up to run ads on their sites, while advertisers can bid for ad space through CASEE. So within the vernacular they provide inventory to those interested in mobile marketing campaigns.

This caught my interest for all the obvious reasons--a Chinese company again leading a mobile initiative and gaining western attention, a mobile marketing play, international M&A--but mostly since I know Velti, the company which invested in CASEE.

Velti is run by CEO Alex Moukas who I had the chance to interview at CTIA in April. Velti is the leading mobile marketing company with over US$60 million in revenues--not the start up AdMob; a listing on the London AIM exchange makes it a far more robust public company. How many other mobile marketing companies are public?  None other that I know of. The company's been around for 8 years, starting out in the mobile messaging space and migrated up as the market has evolved. Mobile advertising is one of the most effective ways of driving fuller branding efforts especially within emerging markets such as China, where most access the Internet via a mobile WAP page. Good play for Velti.

Listen to my interview here with Velti CEO Alex Moukas: (x1, 10:30)

Mutual Utility
Velti's investment is a good play for them to enter into the fastest growing Chinese mobile market. CASEE is serving over 500 million ads a month on over 3,000 WAP sites in China. The company currently has 25 employees, but expects to reach 45 by the end of 2008. The company's publishing partners include Sina, Sohu and QQ.  The announcement said that Velti will be able to extend CASEE's mobile advertising technology outside of China and that the two companies will cooperate on product offerings and development. CASEE's founder and CEO is Xin Ye, former CTO of Linktone (NASDAQ: LTON).

GOOD BONES  & SMEs

CASEE was founded in 2006 by a local Chinese team headquartered in Beijing. Advertising clients span MNCs such as Kodak and General Motors to local, small and medium-sized enterprises. These Chinese SMEs are the real value here since that will be the primary source of advertising growth via the mobile channel in China for the future. Using their special sauce, it matches bids for advertising space against inventory offerings through targeting to maximise the price received by over 2000 content publishers from their WAP sites from advertisers. In short, the basic mobile marketing advertising model currently employed across the globe.  The real value here is the access the CASEE founders have in the Chinese market, including it's CEO, Xin Ye, who was the CTO of  Sohu. The founders and board have extensive experience in the local market, having held senior executive positions at US-listed Chinese companies like Sohu, Baidu and Linktone. CASEE serves more than 500 million ads every month to mobile phones in China and receives its revenues from advertisers.

I think both companies will fare well from the linking investment. Clearly it provides both a complimentary and substantial leg up, into mutually interested markets: one to go outside of China, the other the chance to get into China. Looks like a: win-win. Watch both.

Bharti Bears down on MTN

MTN succumbing to a Bharti full take over

Bharti and MTN are closing their deal according to Friday reports, with financial terms coming soon according to global press speculation. The acquisition deal may be a two part play comprised of a n a 50:50 cash/shares agreement, creating a fully-merged company. Dow Jones, quoting sources close to the situation, relays that Bharti has set a maximum transaction value of US$45 billion, while MTN is seeking US$50 billion for the full show. Both valuations represent a significant premium on MTN's current market cap of US$38 billion. Bharti originally posited a partial takeover, offering US$19 billion for a 51 percent controlling stake in the South African-based operator. Now they want full control.

Office Curtains & Iranian Loopholes

To reflect the depth and stage of this engagement, discussions have begun regarding who will sit on the NewCo's board. Akin to discussing the curtains in a the new office, I would say this deal is done. India's Business Standard reports that Bharti's Sunil Mittal would be deputy chairman and CEO of the NewCo (new company) while MTN chairman MC Ramaphosa could become new group chairman. The report also notes a number of other hurdles that the companies must overcome to make a deal, including the Indian government's 74 percent cap on foreign ownership and the sanctions in some countries where MTN operates (such as Iran, Liberia and Syria), which could make it difficult for US-based investment banks to fund the deal.

BTW, there are loopholes regarding trade with Iran and the restrictions on companies operating in Iran--I know because I've successfully sold into Iran for a US company. It isn't a complete embargo as is Cuba. There are ways....

Looks like this deal is Done!

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.

Mobile Porn is up in Japan

Salarymen mainstream mobile porn

Yes boys and girls, mobile video pornography is running rampant with the infamous Japanese salaryman. 

"Phone Sex" no longer pertains to a lurid voice or text message of "What are you wearing?"  With Japan's 3G networks and robust handset functionality, the business of supplying adult movies for mobile phones is steadily swelling according to Asahi Geino---a male oriented Japanese magazine focusing on sensationalized stories, celebrity gossip, yakuza (Japan's organized crime syndicate), and articles with erotic content or about sex. 90% of the readership are middle aged, married, male salarymen.  Think of it as a bizarre blend of Newsweek, The New Yorker, People, Penthouse, and The National Enquirer.

"Stick Flicks"

For a monthly fee of a few hundred yen, that's about US$ 2.75 boys, they have unlimited access to as many Japanese "stick flicks" as they wish. Less than the cost of one ring tone!

"Mobile phone adult movie channels have all the different genres. Some major adult productions normally on sale in the marketplace have also been reformatted to suit mobile phones," a source well-versed in the mobile phone content market tells Asahi Geino. "These options are becoming really popular, mainly among salarymen who want to be able to watch these movies without their families finding out."

Japan's Lovestyle

A Japanese business called "Lovestyle" is providing the adult movies accessible by mobile phones. "We take old contents like the shijuhate (literally "The 48 Hands," the name given to the traditional Japanese charts of different sex positions), give it a new name like 'Titanic' or something and then provide photo and video footage of each of the positions. We use the video footage to show the insertion angles that achieve the greatest feeling and each position has its own individual explanation,"  said a company spokesman. Let's consider this for a moment--rendering a picture down to at most a 2" x 3" screen (the iPhone isn't available in Japan yet) gives how much detail?

Yet, the service is ringing up attractive profits. But given the "face culture" of Japan, it has become a source for scam artists preying on the pride of some. Many whose identities have been stolen have ended up with large bills from mobile phone adult movie content providers whose services they've never heard nor frequented. But they pay anyway rather than taking up an embarrassing fight that wrongfully exposes them as having a proclivity for "portable porn."  Umm, "portable porn" used to be a hard copy of Playboy. My how things have changed....

The men's weekly says that though the market is limited to Japanese operator au (KDDI), that should also serve as a safety valve for users because they know if they use a service on that carrier it should have been confirmed as a legitimate provider. On the other hand, any adult movies connected with companies like Softbank or NTT DoCoMo should be approached with caution. "That's true, but even so adult movie makers are setting up sites for DoCoMo users one after the other and mobile phone AV is on the verge of becoming an everyday service," a writer on the flesh film industry tells Asahi Geino.

"Some adult movie production companies have mobile phone site links on their official sites. If you check these out, it greatly reduces the risk of getting caught up in a scam."

There you have it. Soon to be arriving in the US...probably 5 years from now.

Now the Dragon eyes the Lion

Is China Mobile in the MTN hunt?

China Mobile has publicly admitted that it is interested in the South African mobile market but has not yet formalized an offer for MTN, the subject of takeover interest by India's Bharti--see my "Poaching in Africa: Bharti's Hunting MTN."

"China Mobile has not joined the MTN bidding, but we are interested in the South African market and we are looking at various opportunities for entering that market," China Mobile CEO Wang Jianzhou stated today after the company's annual meeting. Earlier this week I relayed that Bharti's approach could spark a bidding war for MTN, citing a UBS report that suggested China Mobile, among others, could be interested in bidding for the operator.

Godzilla chasing Bambi?

According to the GSMA's Wireless Intelligence, China Mobile dominates its domestic market with approximately 385 million subscribers as of end first-quarter 2008. This is almost THREE TIMES the  combined customer base of both India's Bharti and MTN's multiple operators. Reuters notes that China Mobile has a mixed track record of acquisitions, stating that it came close to buying emerging-markets operator Millicom International Cellular in 2006 before pulling the plug on the deal. In May 2007 it made its first and only overseas acquisition to date, buying Pakistan’s Paktel Ltd from Millicom for US$460 million.

China Mobile was also rumored last year to be eying MTN, but denied at the time that a deal was being considered. In February, China Mobile opened an EMEA headquarters in London, stating that emerging markets in Africa and the Middle East are priorities for the operator this year. We're now in the deny and chaos stage of takeovers. Given China's presence in throughout Africa and it's growing need for core resources it is a natural strategy to purse. 

There are probably two more iterations in this dance, one feigned interest in MTN by a conglomerate, then either admission or escalation regarding a another bid for MTN by Bharti. Too bad all the action is thousands of miles away from the good ol' USA.

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.

$430 Million into Chinese Facebook--Xiaonei.com

Oak Pacific Interactive (OPI) owner of Xiaonei.com, one of the leading Web 2.0 social networking services in China, announced March 30th that Japanese Softbank Corp. is leading an investment totaling US$430 million for 35% of Xiaonei.com.  The investment funds will be used to further build the leadership and growth needs of Xiaonei.com, one of the leading social networking sites in China.

Xiaonei.com is a full-featured community and social networking destination that provides an "immersive experience" for its users. Features of the site include multi player gaming and wireless value-added services for mobile users. In the college market, Xiaonei.com has a dominating market share. OPI also owns and operates Mop.com, the largest entertainment portal, and Donews.com, one of the leading IT blogging services in China.

Facbeook Rip Off or ChineseWay
Oak Pacific Interactive acquired Xiaonei.com in October 2006. Xionei, positioned like Facebook visually looks like a clone of Facebook and is thought to have a 90% share of the active on line students in China. It was started by Tsinghua university graduate Wang Xing. Much like Facebook's Ivy League heritage Xiaonei focused on China's top schools first, realizing that widespread adoption would follow. They even received angel funding from investors that included an ex-CTO of Amazon.com.

Xiaonei.com’s features include include multi player gaming and wireless services for mobile users. Xiaonei had “22 million registered users and 12.7 million daily users by March,” reports Communication Information. Xiaonei had 280 million page views in March, according to the report.

Mobile, Baseball, Social Networks
As part of the funding conditions Oak Pacific relayed that Masayoshi Son will join its Board of Directors. Masayoshi Son is the President and CEO of SOFTBANK Corp. Softbank is Japan's leading Internet and telecom services company, and Softbank Mobile is Japan's number three mobile phone carrier, after buying Vodafone KK's operations two years ago. SoftBank's revenue doubled this year to $23 billion, thanks to a boost from the new mobile phone unit. SoftBank also runs Yahoo Japan, the country's top Internet site, as well as the baseball team Fukuoka Hawks.

Joseph Chen, Chairman and CEO of Oak Pacific, said, “We are honored to welcome SOFTBANK as an investor and to have Mr. Son join our Board of Directors. SOFTBANK’s commitment reinforces our mission to develop world-class, scalable businesses that leverage the tremendous growth potential of consumer internet market China. We will use this capital to further our aggressive growth strategy for Xiaonei.com and ensure that it sustains its leadership and innovative spirit for many years to come.”

Existing investors of OPI include General Atlantic, DCM, Technology Crossover Ventures, Accel Partners, and Legend Capital. Note: Accel Partners is also an investor in Facebook--as well as Hook Mobile.

As for Facebook entering China, as I relayed in my earlier post "Facebook's Hong Kong Connection vs QQ" I think the western press is getting it wrong on Facebook's Chinese opportunity. Presently it isn't even in China, it just has a BIG Hong Kong investor. Reflecting the Chinese Way, to date most Chinese internet companies are home grown, from Alibaba, to 51Job, Baidu, Ctrip and Sina. I'm absent exceptions but I don't think there's much to worry about a Lao wai, non-Chinese born social networking company taking a big chunk of the Chinese social networking services market at this stage. Just as Haier is making incremental steps in the US market, Facebook should consider the China market a long tail effort. At minimum It needs to get some experienced China hands on board before the opinion beacons of the western press coronate it King of the SNS providers.

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.

China's 3G Soft Launch planned for Beijing Olympics

3G in China hits the Olympic Track

According to Xinhua, China's government news service, third-generation (3G) mobile phone service will be available for use at August's Beijing Olympics as the high-speed wireless connection service and related products were presented as SWAG to Olympic VIPS on Monday.

China Mobile and South Korean mobile phone producer Samsung presented 15,000 3G handsets, plus data cards and nearly 3 million yuan (US$ 428,600 ) of calling fees to the VICs (Very Important Chinese) of the Beijing Organizing Committee for the 29th Olympic Games in Beijing on Monday.

With the limited base of staff and volunteers for the Games who can utilize high-speed data transmissions, allowing them to view mobile televised games, play videos, and surf the Internet on cell phones, it signals the Chinese government's intent and interest to issue licenses and finally enter the foray of 3G mobility. CMCC's technology is the Chinese 3G standard, known as TD-SCDMA (Time Division Synchronous Code Division Multiple Access), and has been conducting limited trials of 3G service in China.

China Mobile has building out their TD-SCDMA network in eight cities, five of which are to host events for the Beijing Olympics in August, including Beijing, Shanghai and Tianjin, advised company insiders.  China Mobile is the sole Olympics partner/sponsor for the Beijing Olympics for mobile communications services while Samsung is the only sponsor for mobile terminal supply.

The beginning of the beginning of the 3G wars

With the ITU (International Telecommunication Union) having recognized TD-SCDMA as one of the world's three official 3G standards in 2000 it is inevitable that the next mobile technology wars will be started soon. The other two are Europe's WCDMA and North America's CDMA 2000. With close to 600 million mobile users in the Chinese domestic market, close to twice the US population, as well as the twice the population of the EU, where do you think this market battle will be settled--out of the US, Europe or China?

Facebook's Hong Kong Connection vs QQ

Li Ka-Shing overlooks QQ?

Last month it was reported that Li Ka-Shing, one time plastic flower manufacturer, 11th richest man on  the planet and Hong Kong billionaire upped his stake in Facebook to more than $100 million according to  published reports. Li previously invested a reported US$60 million in Facebook in November 2007.   

That means that he now owns nearly 1 percent of Facebook, assuming the deal was made at the same $15 billion valuation that had been placed on the company since Microsoft's US$240 million of October 2007. If the valuation has dropped, he owns even more!

Li, who is chairman of port conglomerate, real estate speculator and telecom company Hutchinson Whampoa, told reporters on his company's conference call:

"Facebook is doing very well and we could have some synergy between the 3G services of Hutchison and Facebook, so the customers could use Facebook on mobile phones."

Certainly, mobile is the biggest opportunity for social networking in China, with close to 600 million mobile users in the middle kingdom, versus less than 30% of that for China's web uses--172 million users. Facebook may be considering this as a move to enter the China market by thinking it can get "on deck" with the Chinese carriers, resulting in tens of millions of users very quickly. If Facebook thinks this is access to China's mobile silk road, ask yourself how much of CMCC does Li Ka Shing own? Answer: 0%. Such simplistic theories are easily dismissed.

An Investor First

The "Chinese Way" prefers to do business with a local Chinese provider. Better joss with a local who can then go global, than a loa wai company entering China. The cultural reveloution was not that long ago, and just as economic nationalism is expressed with US consumers (Buy American!), the same happens in China. Facebook will not so easily enter the Chinese market on the coat tails of Li, especially since mobile operator Hutch 3 (Li's primary property) in Hong Kong has no formal commercial presence in the mainland. Better to deal directly with the Chinese, something Facebook's new COO, Sheryl Sandberg is likely to be the only one in the building who has ever sat across from a Chinese functionary, from her prior experience at the US Treasury Dept.

Plus there are rumors that Facebook is seeking a revenue return for Facebook subscribers who utilize mobile operator text and mobile messaging through their Facebook account. Whoa--they think they will get operators to pay them for messaging traffic. A very bold commercial position which would be an attempt to realign the mobile messaging business. This is an opportunity that I've surmised in the past and that I think is possible where social networking services could capture messaging traffic if they approach it correctly--not by confrontation with the mobile operators but through co-opting. Perhaps they think China's social silk road runs through Li Kai Shing. Perhaps they think they can leverage CMCC much as Apple has in taming the Dragon? Clearly University Ave is a long way from Tsim Sha Tsui and I don't think the Cuppertino business case is the one to follow in China.

What will QQ will do?

Who is QQ you ask? For the uninitiated or overly  western centric in the audience, QQ is the world's largest social networking service with over 300 million users in China, with revenues exceeding US$523 million. That's almost 4x Facebook's estimated US$150 million in revenues. With an operating profit of US$224 million, and 21% of its total revenues of US$334 million generated from NON ADVERTISING MOBILE revenues of $110 million perhaps Li Kai Shing should have invested in TenCent the owner of QQ.

QQ is still growing. Notably, the ad market is largely untapped - mostly due to the misunderstanding of IM and SNS by ad agencies and brands in China. Lots of work to convince those folks that a service that attracts so many millions is, perhaps, a media in its own right. Probably why Li Ka Shing invested in Facebook in the first place. He gets it that it is an emerging media platform, not a simple application.