ANALYSIS - West misses a trick as mobile money takes off

By Georgina Prodhan

LONDON (Reuters) - Mobile operators seeking the "killer application" that customers can't live without should look again at emerging markets, where mobile money is proving a valuable tool for connecting the unbanked.

Carriers in Africa, Asia and Latin America are finding that offering customers the chance to use their phones to transfer money to family and friends, pay bills or make purchases brings the kind of loyalty that Western counterparts can only dream of.

Although the sums of money involved are mostly tiny, many of these customers have no bank account, meaning their handset is their first and only connection to the financial system, and changing telecoms provider is extremely disruptive.

"Once you get to a critical mass, if you've got customers, you've got customers for life," Brian Richardson, chief executive of South African mobile banking company Wizzit told an industry conference in Barcelona last week.

Western carriers have largely pulled back from adventurous acquisitions in emerging markets, which became unpopular with shareholders and were then stymied by the global credit crunch.

Instead, seeing the success of Apple's iPhone and fearing the prospect of becoming mere "dumb pipes" for valuable media content, they have become preoccupied with trying to boost profits by driving up data usage in developed markets.

The industry's hottest M&A news is the $23 billion attempt by India's Bharti Airtel to merge with South Africa's MTN, while Kuwait's Zain blazes an acquisition trail through 24 Middle Eastern and African markets.

Zain has created a multi-national network by scrapping roaming charges across its markets, and is rolling out its mobile-money service Zap across the network, which it reckons will help it double customer numbers to 110 million by 2011.