Private equity $25 mln for East African media and telecoms

Emerging Capital Partners (ECP) announced on 22 September it has committed $25 million to Wananchi Group Holdings (www.wananchi.com/), a leading East African media and telecommunications company specializing in pay television and high-speed Internet services in Kenya and Tanzania.  ECP is an international private equity firm focused on investing across Africa and this is its 10th investment in African telecoms. It still has stakes in Zain Gabon, MTN Cote d’Ivoire and Cellcom (GSM operator in Liberia and Guinea).

The equity investment will help upgrade and expand Wananchi’s existing network infrastructure to provide East Africa’s first triple-play service, consisting of digital pay television, high-speed Internet and Voice-Over-IP services.

ECP’s CEO Tom Gibian says, according to the website (www.ecpinvestments.com) “ECP has been active in the African telecom sector for nearly a decade. Following on the tremendous growth in African mobile penetration over the last 10 years, we view broadband and related services as the next “game changer” in African telecom.  Wananchi’s product offering, network infrastructure and strong management are ideally suited to address the significant unmet demand for media and broadband services in East Africa.” So called “triple play” has been a major driver for growth of telecom companies in developed and emerging markets for the past decade.

Wananchi presently serves the retail and corporate markets in Kenya and Tanzania through its consumer and corporate divisions.  The consumer division operates under the Zuku brand and provides cable television and broadband Internet services to residential customers in Kenya using a combination of hybrid-fiber-coaxial and WiMax technologies. The corporate division operates under the SimbaNET brand and is a leading provider of Internet and virtual private network services to corporations, local governments and non-governmental organizations in Kenya and Tanzania using a combination of metro-fiber, WiMax and VSAT technologies.

Cost and infrastructure used to limit East Africa’s pay television and Internet services and penetration rates of cable television and broadband Internet throughout Kenya and Tanzania are less than 1% each. South Africa’s penetration rates for pay television and broadband Internet are approximately 15% and 4% and Mexico’s 24% and 20%. East Africa’s demand is growing, spurred by strong GDP growth, the emerging middle class, and new undersea fibre cables that make services more accessible and affordable.

Regional venture capital fund manager East Africa Capital Partners (www.eacp.co.ke) formed Wananchi Group in 2007 through acquiring several smaller companies.  EACP chairman, Mark Schneider, is a leading cable entrepreneur and co-founder of United Global Communications which was acquired by Liberty Media in 2004 and grew to become one of the largest cable companies in the world with operations in over 20 countries in Europe, Latin America and Asia.

Bryce Fort, ECP managing director, says the firm “is looking forward to working with EACP and Wananchi, two of East Africa’s world-class institutions.”

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