As recently reported in the Investors Business Daily, there is a race among various cellular phone operators to grab assets in still-developing markets where wireless penetration is still well below 30%, and in some cases 10%, in many parts of Africa, southeast Asia, central Asia and other remote areas of the globe. As the article notes:

“…The clamoring for emerging market assets has been driving prices for licenses and in acquisitions much higher, in some cases to ridiculous levels. ”

“Some of the acquiring companies have big war chests to go out there and seek assets.”

The battle pits heavyweights such as Vodafone, (VOD) France Telecom (FTE) and China Mobile (CHL) against Millicom Cellular; (MICC) newcomer Zain, formerly called MTC Kuwait; Russia’s VimpelCom (VIP) and Mobile TeleSystems; (MBT) America Movil (AMX) ; Europe’s TeliaSonera; India’s Bharti; and other well-funded players.

…Another route into emerging markets has been acquisitions. Valuations have jumped for small operators that already own airwaves.

Kuwait-based Zain has sent shock waves through the industry with its spending spree.

“There’s been intense bidding in some areas of the world,” said Kevin Roe, principal of Roe Equity Research. “Some of the bidding has seemed irrational. Zain has been involved in some crazy stuff.”

In March, Zain agreed to pay $6.1 billion for the third wireless license in Saudi Arabia, beating out India’s Bharti. Zain has spent some $9 billion since 2005 to expand in Africa.

With more stable governments and expanding economies, Africa has emerged as a key wireless battleground.

“Africa is very much the flavor of the year, a lot of newcomers are coming into the market,” said Marc Buels, chief executive of Millicom. It operates in seven African markets as well as Latin America and Asia.

…Rivals underestimate what’s required to operate in Africa, Buels says. “It’s a much different environment,” he said. “It’s not the same business model as Europe or even the Middle East.”

France Telecom is aiming to double its subscriber base in Africa to 50 million in three years.

The company last month struck a deal to buy a majority stake in Kenya’s No. 3 wireless firm. It’s also the lead bidder for the majority of Ghana Telecom, say media reports.

…China Mobile backed off a deal to buy Millicom in mid-2006. But it still seems interested in Africa.

Reports surfaced in November that China Mobile has eyed a deal to take a stake in MTN Group, which operates in Africa and the Middle East. MTN denied the reports but could be a target, analysts say.

“MTN has operations in markets with over 500 million people with combined penetration of less than 30%,” said Philip Kendall, analyst at Strategy Analytics. “There’s significant room for growth there.”

China Mobile expanded into Pakistan in 2006. It’s prowling for more deals in Asia, analysts say.

VimpelCom and Mobile TeleSystems have expanded into Ukraine, Kazakhstan, Uzbekistan and other neighboring countries. Kendall says the Russian wireless giants seem to have the inside track in acquiring wireless assets in central Asia. However Swedish operator TeliaSonera in July bought MCT, which has stakes in operators in Uzbekistan and other countries.

Vimpel is now targeting southeast Asia. It’s in talks to create a joint venture in Vietnam, a country that’s of interest to Millicom as well.

The Vietnam deal would give VimpelCom a stake in the country’s No. 4 wireless firm.

…With nearly all big wireless firms eyeing tiny markets for growth, it’s going to be harder for emerging market specialists, like Millicom, said Roe.

“Millicom has been able to pull a few rabbits out of the hat, like Congo and Colombia,” Roe said. “But now it’s much harder for them to fly under the radar and get assets on the cheap….”