A few days ago I found an interesting article in the newspaper. It ranked the earnings growth over the past three years of several of the biggest communication companies in the world. Telecom companies from developing countries (India, South Africa, Mexico) were ranked among the highest, with double-digit growth rates. While companies from developed nations (Japan, France, UK) registered a mere single digit growth rates, with some companies registering a negative growth rate.
Zain ranked third with an earnings growth rate that is close to 100%. Zain’s huge growth can be attributed to in-organic growth, as the growth was the result of them buying Celtel, the African operator. In-organic growth is not as sustainable as organic growth (resulting from growing one’s business). Zain’s ambitious plans and growing debt led the company to sell its assets when times become rough.
I guess in three years, this chart would be different. Zain would be at the bottom rather than the top, probably with a negative earnings growth.
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Loading ...Tags: Bharti, Celtel, Earnings Growth, Inorganic Growth, Organic Growth, Zain, Zain Africa
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Bharti wanted to buy MTN (highest growthing company) but failed in two attempts. Now it wants to buy ZAIN (third highest growing company). Maybe we should’ve seen that coming?
If I was China Mobile, I’d go-out and buy MTN. With China Mobile’s ample cash, acquiring MTN opens a new venue for growth in a potentially fast-growing region (Africa). Further, I could see the Africans agreeing to such a deal with the Chinese vs companies from other protective regions in the world. Zain is gone, so China Mobile should really consider this final opportunity.
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