The ongoing potential for rapid mobile subscription growth means that emerging markets are set to take over as the main driver of M & A activity, according to research released Thursday.

Findings from the Global Mobile M&A report, released by industry analyst and parent Informa Telecoms & Media, reveal that although M&A activity appeared to decline in 2007 and is likely to fall again in value in 2008, the number of deals still suggests an active market.

And while market consolidation traditionally represented the pattern in many of Europe and North America’s markets, increasing consumer demand for mobile service continues to attract investors to emerging markets, especially to Africa and the Indian sub continent.

Informa points to a market penetration of just 34 per cent across Africa and around 36 million net additions in the Indian sub-continent in the first quarter of 2008 alone, to illustrate the potential afforded by these two regions.

The analyst expects Vodafone to continue to focus on its emerging markets expansion strategy on the back of its $11.1bn purchase of Hutchison Essar in India, and its $4.5bn acquisition of Telsim. However, two of the largest operators in the Gulf region – STC of Saudi Arabia and Qtel of Qatar – are also on the spend, having snapped up minority stakes in Maxis in Malaysia and Indosat in Indonesia respectively.

“We expect to see more activity from Middle Eastern operators as they look to offset fading growth in their own highly penetrated domestic markets. It will be interesting to follow the movements of a new breed of investor from the region with Warid Telecom and HiTs Telecom both looking to ramp up their investment strategies in Asia and especially Africa,” said Informa principal analyst, Nick Jotischky.

Moreover, in the face of the global credit crunch, Informa believes financial investors are still preparing to make significant investments in the mobile market, as shown by the imminent acquisition of Canadian operator BCE by a triumvirate of equity funds.

Informa suggests that financial investors are not just looking at operators themselves, but also their infrastructure, such as the tower units of mobile carriers. Earlier this year, leading Indian mobile operator Bharti Airtel divested a 2 per cent stake in its tower unit to a private equity group for $250m. Earlier still, a group of seven financial investors had acquired a 9 per cent stake in Bharti Infratel for $1bn.