REGULATION IN AFRICA
As the double-edged sword of rising competition and slow growth slices across the African wholesale market consolidation, efforts are starting to drive merger and acquisition (M&A) activity as the smaller players are bought out. MTN, Vodafone, Bharti Airtel and Orange still dominate and that doesn’t look like changing soon.
However, increased interest in infrastructure deals is being experienced as operators consider strategic options and infrastructure deals are increasingly being done, with tower and cable being the key infrastructures under consideration.
The shape of investment is beginning to move away from the public sector. Kenya has gone for a public-private-partnership model for a single wholesale LTE network in the hope it will step up the availability of broadband services
As more 3G and 4G network licence auctions and awards happen Africa and moves to digital television, spectrum availability for the telecommunication sector will increase.
Triple play service threat
The various undersea cables bringing faster connectivity are opening Africa to the possibility of triple play services. In Kenya, the Wananchi Group is offering such services. As this space evolves, M&A deals for companies with data licences – where converged licences are not in effect – and content and media providers may drive smaller M&A deals.
South Atlantic Cable System (SACS) will reduce latency between Africa and South America from 300ms to 63ms once it is completed in mid-2018, says Angola Cables CEO Antonio Nunes.
Following the success of mobile money transfer services in Kenya (M-pesa) and the growth of African mobile subscribers, regional telco players are evaluating and adopting the model to tap into new revenue options and extend access of the unbanked population. There will be continued partnerships between telcos and financial institutions to offer clients mobile based money transfer services and micro-credit services.
In Kenya, Safaricom in partnership with Commercial Bank of Africa has taken the mobile money transfer one step ahead and introduced M-shawari, a mobile microcredit services product. This new wave of m-money services raises a wild card possibility of potential acquisitions and mergers between telcos and financial institutions in Africa where mobile money is taking root.
There is continuing disruptive competition in the market. Indeed Dobek Pater, analyst at Africa Analysts, said at the Capacity Africa event in September that the major concerns were: disruptive competition at 73%; uncertain regulatory concerns 64%; lack of organisational agility 45% and lack of return on investment 39%.
Pater said that the rapidly changing competitive landscape meant that the new fundamental skills and challenges to the African market are to understand the disruption taking place and redefine competition to survive.
Pater said that the African wholesale market is declining, but it will stabilise between now and the end of 2017.
The sword of regulation
Frank Tumwebaze, Uganda’s minister of information technology and communications, has issued a challenge to all African wholesale providers to start sharing more and work harder towards the goal of cheaper access for users.
Tumwebaze, also speaking at the Capacity Africa conference in Kampala, said that the government’s main concerns were quality of service and cost of services to the end user.
He explained that the national Ugandan broadband backbone infrastructure, planned by the government and presently in the early stages of rollout, needs a public-private partnership if it is to be completed quickly and on time.
He said: “The objective of government is to make the cost of data affordable to ordinary people. We have to protect the ability of our young people to be able to carry on using their apps.”
He admonished the carriers and operators, not just those present, and said: “Why are you not sharing your infrastructure amongst yourselves for everyone? At present what is happening is that everyone is doing their own thing. We have to ensure that we make it work.”
Silvio do Carmo, SADC and East Africa managing director for PCCW Global, told Capacity in response to Tumwebaze’s comments that: “I agree with his comments but in an uncertain time, with many new technological changes pounding us daily, it is about partnerships and creating value for the users. Cost is not the only issue. Quality is as is value-add.”
Steven van der Linde, CSO of Seacom said: “If this was the precursor to more regulation I would get worried. Regulation is not the answer. But collaboration is key.”
Frank Tumwebaze, Uganda’s minister of information technology and communications, speaks at the Capacity Africa event in Uganda