MTN separates Zambia fibre business
• Move a step in decoupling assets which group says are not reflected in share price
MTN has completed the structural separation of its fibre business in Zambia, a move in which the unit there takes on the fibre assets of the mobile group in that country.
This is part of the group’s plan to grow the unit, which will include it building a R6bn project between East and West Africa.
In recent years, MTN has ramped up its fibre-building efforts in Africa where it already operates the largest mobile network. As part of the expansion, the group is working to create a separate fibre unit, after the separation of its fintech business.
The group has long argued that the value of such assets is not truly reflected in its share price.
On Wednesday, the group’s recently rebranded infrastructure unit, Bayobab (formerly MTN Global Connect), said it had completed a process to acquire the fibre assets of MTN in Zambia. The mobile operator will lease back the same infrastructure from Bayobab.
“The successful sale-andleaseback transaction with Bayobab Zambia, transferring MTN Zambia’s fibre network, marks a pivotal first step in our targeted structural separation of fibre assets as outlined in Ambition 2025 strategy,” MTN group CEO Ralph Mupita said.
“This decision not only underscores our dedication to spearheading growth and fostering innovation but also plays a crucial role in driving us towards the vision of a seamlessly connected and digitally empowered Africa.”
In Zambia the move will enhance Bayobab’s capabilities by improving traffic management on its fibre networks and making bandwidth usage more efficient. The group says consolidating fibre assets under the infrastructure unit will “elevate the quality, resilience, and latency of services, delivering reliable, high-speed connectivity to customers throughout network”.
Bayobab Zambia aims to position itself as a key point of connectivity in the region with connections to seven neighbouring countries — Angola, Tanzania, Botswana, Namibia, Zimbabwe, Malawi, and the Democratic Republic of Congo.
Fibre is used as a way to connect masts and towers within a telecom network, connecting data centres and countries to the rest of the world.
“Bayobab is keen on further integration efforts to transform Zambia into a central digital hub in Southern Africa,” the group said.
During MTN’s recent presentation of its 2023 full-year results, Mupita said the group’s engagements with authorities to secure similar regulatory clearances in key markets were a priority.
Competition in building the largest cross-continental fibre network appears to have developed between the JSE-listed group and Strive Masiyiwa’s Liquid Intelligent Technologies.
Both companies purport to have more than 100,000km of fibre assets on the continent. While Liquid has tended to focus on the Cape Town to Cairo route, covering the south-north axis of Africa, MTN and its partners are looking at the east-west pivot.
Bayobab’s terrestrial fibre network now spans 114,000km, with an aim to reach 135,000km by 2025.
The unit is helping MTN to service its 295-million African subscribers.
Confidence for the fibre separation was likely bolstered by success in the group’s fintech unit and interest from finance houses in telecom infrastructure businesses.
In January, payments giant Mastercard invested R3.8bn in MTN’s fintech business as part of a plan to partner with industry experts that will help to grow that new revenue line. The transaction values the unit at $5.2bn (about R100bn), indicating a 3.8% stake.