Capacity - - Contents -

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

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