European and Middle Eastern service providers have been making inroads into the African mobile arena for years, but now Asian service providers are scrambling to get a slice of the world's last unsaturated market. Indian firms are increasingly looking at telecom markets in Africa in order to expand their geographical footprint and double their profits through acquisitions and tie-ups with existing operators.

India's state-run mobile telecom operators Mahanagar Telephone Nigam and Bharat Sanchar Nigam as well as Bharti Airtel, Reliance Communication and Vavasi are all scrambling to share a slice of the African mobile market.

Despite political and regulatory risks, Africa still remains an indisputably profitable region for the mobile-phone business.

In many African countries, however, a service provider is required to get a license for each service that the company wants to roll out. Meanwhile, bureaucracy and corruption in the acquisition of such licenses are deeply rooted in the system. This has resulted in the high cost of doing business and the high cost of communication in the region.

However, the ability of Asian telecom service providers to lower communication costs and take calculated risks in investing in the African region is seen as a significant challenge to European and Middle Eastern companies that have slowed down their investments. Communication experts in Africa claim the global economic crunch has played a major role in slowing down European telecom companies' investment in Africa's mobile market. Vodafone and France's Orange are the major European mobile service providers operating in Africa.

Indian companies' push for investment in Africa comes after decades of ignoring the African mobile market. African telecom market analysts claim Asian operators have now realized that Africa is a market that can no longer be ignored.

"Investing in Africa's mobile market is unavoidable by any operator that wants to grow its subscriber base and increase its profit margin," said Amos Makanya, a telecom analyst from the African Agency for ICT Development.

From west Africa to southern Africa, Indian mobile operators are now pressing hard for acquisitions and tie-ups with African operators. MTN, Africa's largest mobile operator by subscriber numbers, has been courted by two Indian companies -- Bharti Airtel and Reliance Communications -- although both attempts flopped over ownership and regulatory hurdles.

With the Bharti-MTN deal now off the table, Indian companies are shifting their attention to another major African operator -- Vodacom, which has a presence in several African countries including South Africa, Tanzania and Mozambique.

Reliance Communications and Essar Group already own telecom assets in Africa including Aupam Global Soft Ltd. (Uganda) and Essar Telecom Kenya.

Currently, both Bharti Airtel and Essar Group are competing to buy Zain's Africa operations. Zain Africa is still in the midst of a strategic review and is being advised by Swiss investment bank USB.

Essar is also pushing to buy Warid Telecom Uganda and Warid Congo SA.

Additionally, Mahanagar Telephone Nigam is bidding to buy Nigeria's and Zambia's incumbent operators, Nitel and the Zambia Telecommunications Company.

The appetite for investment in the African market by Indian operators has been augmented by the Indian government's US$125 million, pan-African e-network project aimed at connecting all African countries to satellite and fiber-optic networks in order to improve communications in the region. The Indian government is also setting up a private communication network for all Africa Union heads of state. The Indian government and the Africa Union signed the memorandum of understanding to formalize the project in 2005.

Over the past three years, the Indian government has made it clear that Indian companies would make inroads into Africa's ICT market before China and other countries solidify their investment in the region.