Rumors are reportedly making the rounds that Glo may be looking to acquire its industry rival Etisalat.
There are rumors that Glo may be planning to acquire Etisalat
While the rumors are still unconfirmed, it is not hard to see why an Etisalat acquisition by Glo will make sense for both telcos.
Etisalat is currently in talks with a consortium of banks it owes a $1.2 billion loan which it has defaulted on. Nairametrics reports that the banks have just rejected a 5% stake offered by Etisalat as part of the debt servicing arrangement.
While the rumors are still unconfirmed, it is not hard to see why an Etisalat acquisition by Glo will make sense for both telcos. For one, an acquisition of this nature provides the right conditions for Glo, which has 37.3 million subscribers, to get closer in terms of market share to market leader MTN Nigeria, which has 60+ million subs.
Etisalat currently has the least number of subscribers amongst the telcos (18 million subs) and a Glo acquisition means both companies can compete on a stronger foot.
That aside, revenue from Voice and SMS across the industry has been on the decline, so telcos will get to spend less money per customer (which is the point of it all) if they share infrastructure.
This is important because Glo currently has the cheapest data charges in the industry because it has its own infrastructure and can leverage on that to remain competitive in the industry.
Etisalat on the other hand has the highest data charges so a consolidation of both parties could result in cheaper data across the board with customers getting better value.
It also means the telcos will make more money (or at least spend less money) per customer.
Obviously, this kind of deal which has far reaching implications for the industry as a whole will not go through without without some resistance. Internet Service Providers (ISPs) like Smile, Spectranet and the rest of them (who do not own data infrastructure) are already under a lot of pressure just to stay afloat so it’s not hard to imagine them doing all they can to block this kind of deal.
As I mentioned earlier, it is easy for Glo to offer its customers cheaper data tariffs because it has its own fibre-optic cable infrastructure.
Acquiring Etisalat puts the Mike Adenuga-owned company at an even stronger advantage in terms of market share and competitive advantage.
Both Glo and Etisalat have not issued any statements or comment on this rumor, but the possibility should not be ruled. We’ll see how it all plays out.
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