Last month, MTN, the South-Africa-based mobile operator with about 70 mn customers worldwide became a known name in India. First there was talk of a deal with Bharti Airtel. The deal fell through pretty quickly because of structuring problems-and the possible dent to Indian pride as a result. Essentially Bharti Airtel refused to become a subsidiary of MTN. Literally hours later, Reliance Telecom started its negotiations with the MTN group. If these succeed it will create a telecom company with 120 mn subscribers which would be the world's fifth or sixth largest. Though talks are still on, what is of interest is that none of the US-based companies was seen to be interested. Apart from India, mobile operators from China and the Gulf countries were also reported to be keen to have a partnership with MTN.

In a manner of speaking, the development is logical. Asia and Africa are the fastest growing telecom markets in the world, and there is no reason why there should not be deals amongst them. On the other hand, there is a fear that this urge to merge would strain the balance sheets of the Indian companies. Bharti Airtel's shares dropped in the Indian market when the talks started. Reliance Telecom has been more stable but it has been threatened a lawsuit by Reliance Industries-as two of the richest Indians keep needling each other.

There is a clear change emerging in the pecking order of the mobile-telephony world and a coming of age for the Asian companies. The deal with MTN could be worth $20–30 bn. It compares with the Verizon Alltell deal of $28 bn, which will make Verizon the largest US wireless carrier. Because China and India, in that order, are the world's fastest growing mobile markets, the mobile companies in these are also expected to take the lead in overseas investments.

According to analyst and consulting firm, Ovum, China and India are slated to be the two single largest markets by 2012, accounting for 31% of the world's mobile connections. Ovum forecasts mobile penetration to reach 64% in China and 55% in India by 2012, which still leaves immense growth potential in both markets. Global Insight, another consulting firm, has also predicted that of the 1.2 bn predicted new mobile subscribers by 2011, 60% will come from China and India. If India has Bharti Airtel (68 mn subscribers), Reliance Communications (46 mn), and BSNL (40 mn), China is way ahead with China Mobile (392 mn) and China Unicom (168 mn).

Overseas acquisitions can help Indian companies beef up revenues-and bottomlines. The Indian market gives ARPUs of $10 per month. International markets give $100 per month. The rates of calls, text messages, and value-added services in India are among the lowest in the world. Volumes drive market growth in India-though there is greater scope to expand domestic operations, the ARPU is not expected to rise to the levels available in the West.

Indian companies are more cost-efficient than their Western counterparts-infrastructure sharing; outsourcing operations like customer service, network deployment and IT services; and focusing on prepaid customers help Indian companies to lower their administrative costs and build lean organizations. They could hope to use some of the tricks they have learnt in an intensely competitive market at other locations also. Venturing abroad through acquisitions and partnerships does have significant advantages in this scenario. Indian companies will gain access to new subscribers, products, and technologies; it will also provide economies of scale.

Along with expanding domestic operations, therefore, Indian companies are well poised to take the overseas leap. Provided they can get over the problems of pride and ego.