India's Biggest Telecom Company Establishes Presence in Africa

Bharti Airtel, India's top telecommunication company, announced this week its purchase of a Kuwaiti company's African operations. The multi-billion dollar deal represents India's biggest push into Africa. Africa is on the radar of many Indian companies seeking to expand their businesses.

Bharti Airtel's $10.7 billion deal to buy Kuwaiti-based Zain's African assets is the largest overseas acquisition in Africa by an Indian company. It gives the Indian company a presence in 15 African countries.

The deal was clinched two years after the Indian company began searching for opportunities in Africa - one of the world's least developed telecommunication markets.

The acquisition by South Asia's largest telecommunication company gives it 42 million potential new customers. But hard work lies ahead for the Indian company to turn Zain's loss making operations into a profitable business venture.

The 15 countries in which it will operate present diverse challenges. Bharti hopes its model of low tariffs and high volumes will establish it as a leading player in the continent, where only one-third of the population carries mobile phones.

Bharti founder and chairman, Sunil Mittal, is confident of success, and calls Africa the continent of hope and opportunity. "This is something we have believed in a long time and have been after for nearly a couple of years, and are delighted that we have come to Africa with a very important and visible asset," he said.

Business analysts say the perception that Africa is a risky market is changing. Among other things, economic growth is rising in several African nations. And like India, many nations have a large middle class population.

Analysts say many Indian companies, which are now searching for opportunities beyond traditional markets in the West for their goods and services, are considering Africa.

The expertise that Indian businesses have in low cost manufacturing makes them particularly suitable for Africa.

And because they are accustomed to bureaucratic hurdles at home, Indian companies are not deterred by any similar challenges they may confront in Africa.

Indian investments in Africa are estimated at over $16 billion. Companies specializing in pharmaceuticals, automobiles, information technology, power, and consumer goods are among the many which have pushed into the African market. Many more are expected to follow suit.