FE Report

British mobile phone giant Vodafone has planned to buy a minority stake in the country's third largest mobile phone operator AKTel as part of its expansion drive into emerging markets, officials said Wednesday.

The plan was unveiled at a meeting between the visiting Vodafone chief of Asia, Africa and China operations and the country's telecom regulator.

"We may buy some minority stakes of the company (AKTel). This is the most visible opportunities," Gavin Darby, the Vodafone chief, said after his meeting with Manzurul Alam, the head of Bangladesh Telecommunications Regulatory Commission (BTRC).

'We are in an early investigation. It may take a couple of months," he told reporters.

"They told us they've planned to buy AKTel's 30 per cent stake owned by the AK Khan group. We said there is no regulatory bar to their takeover," BTRC chairman Alam said.

Chittagong-based AK Khan Group which holds the minority stake at AKTel admitted that it was holding negotiations with Vodafone.

"Yes, they approached us. I've already met the visiting Vodafone top officials," head of the group Salauddin Kashem Khan said.

"But nothing has been finalised yet. It is still premature," he said.

Vodafone is also a strategic partner of Telekom Malaysia International (TMI) which holds the majority 70 per cent stake in the AKTel.

The TMI, however, refused to make comments on whether it was approached by the British giant for its stake in the company.

Vodafone is the world's leading mobile phone company, with 241 million customers as of September 30, 2007, based on the registered customers of mobile ventures in which it had ownership interests.

In April last year the company snapped up Indian mobile phone operator Hutchison Essar for 11.1 billion dollars as it looked to expand in emerging markets.

Its total revenue grew nine percent to 17.0 billion pounds (24.0 billion euros, 35.1 billion dollars) in the six months to September 30, compared with the same period in 2006.

The takeover move confirms the speculation that the struggling AKTel was planning to sell some of its stake to infuse new momentum in its operations.

The company, which at one stage threatened the leadership of GrameenPhone in the local market, has been losing clients since August last year.

Last month it even lost the second place it held for over eight years to Egyptian company Orascom-owned Banglalink, which had 7.08 million subscribers against AKTel's 6.5 million subscribers at the end of 2007.

An analyst said the takeover was the first sign of consolidation in the country's mobile phone market.

"I don't think Vodafone will only settle with a minority stake in AKTel. They will eventually buy a majority stake to compete with GrameenPhone," an analyst who held a big position in a mobile phone company said.

"Their entry will also heat up competition here, setting off another round of price war in the country. Eventually, only three to four operators will survive," he added.

On Tuesday, special aide of the chief adviser MA Malek ruled out sale of the struggling state-owned mobile phone operator, Teletalk Limited to Vodafone after Darby went to meet him.

Teletalk with only 850,000 clients at the end of 2007 is the smallest of the six operators in the country. It has been losing money since starting operation in 2005.

The chairman of the BTRC also ruled out issuance of any new license as the market is "too crowded with six operators", although Malek had sounded positive about it.

Vodafone's plan came as the mobile phone subscriptions in Bangladesh soared by 58 percent in 2007, spurred by a price war among operators.

The country added over one million subscribers a month in 2007 as the total number rose to 34.37 million at the end of the year, up from 21.77 million in 2006.

GrameenPhone, 62 percent owned by Norway's Telenor, led with 16.48 million users. Dubai-based Warid with 2.48 million subscribers in seven months, however, is the fastest growing operators in Bangladesh.

Total landline and mobile phone penetration in Bangladesh rose to over 20 percent of the population. Telephone penetration was only one percent in 1997 when the country's top three mobile phone companies launched their services.

Market operators said the number of mobile phone users would hit more than 50 million by 2009, boosted by plummeting tariffs, connection fees and handset prices.