The prospect of consolidation among African and Middle Eastern operators has provided much fuel for the industry rumour mill in 2009, but the apparent collapse of talks involving Zain Africa as well as those between Bharti and MTN has not diminished the appetite for expansion.

Singaporean carrier SingTel, owner of Optus, is the latest major player to express an interest in the African region. As the Africa Com 2009 event kicked off in Cape Town on Wednesday SingTel’s chief executive Chua Sock Koong said that she was eyeing up Africa as a potential target for expansion. “Africa is a market that is definitely worth our interest,” Chua said.

The announcement came as SingTel reported quarterly financials for the three months to the end of September. Net profit at the group was up 10 per cent year on year to S$956m, compared to S$868m in 2008, while revenues climbed 5.4 per cent year on year to S$4.1bn.

Singapore has a mobile penetration of    and SingTel is looking further afield for growth opportunities. Given its 32 per cent holding in Indian operator Bharti Airtel, SingTel was one of the supporters of Bharti’s move to acquire a stake in African carrier MTN.

The talks between Bharti and MTN collapsed however, amid concerns on the part of the South African government that its national champion could fall into foreign hands.

At the same time, tongues were also wagging about the potential sale of Zain Africa, or at least a stake in the firm. Yet in his opening keynote speech at the Africa Com event on Wednesday, Chris Gabriel, CEO of Zain Africa repeated a number of times that “Zain Africa is not for sale. We are focused on our objective to become a top ten player by 2011 and we still have an appetite for expansion,” he said. Yet Gabriel expects further consolidation within the region, led by a handful of major players.

But this expected wave of consolidation could catch the incumbent carriers on the back foot. Nick Jotischky, regional research manager for Africa at Informa Telecoms & Media, warned that Africa was a land of challenges due to its harsh operating environment, but it also has strong growth opportunities. “It is survival of the fittest,” Jotischky said during the opening keynote. “Those operators who best adapt to their environment will succeed, they need new business models,” he said.

Despite the little M&A activity so far, it seems the industry is agreed that there is a huge potential in Africa for canny investors and innovative companies. But there is also the potential for incumbents and other market heavyweights to lose their footing.

“The operating environment is a threat to incumbents,” said Jotischky. “There is much more competition, new players, alternative players such as MVNOs,” acknowledging the success of Oman’s first MVNOs Friendi and Renna, the former of which notched up 100,000 subscribers in the first three months.

“These MVNOs have ambitions to become regional players,” said Jotischky. “They show that there are opportunities for players big and small to enter new markets as long as the business model is good. And the MVNO business model is of interest in Africa. There are huge opportunities as many regulators would like to see MVNOs in their market. So incumbents have to ask whether they are an opportunity or a threat, but if they are an opportunity then the carriers need to make sure they have a strong brand, a focus on an underserved market, good market reach and distribution and relevant content to make it a success.”