February 15th, 2010 by Tom Minney
Telecoms have attracted some of Africa’s biggest and most lucrative equity deals and the 14 Feb sale of $10.7 billion of telecom assets further indicates the rising power from the East, this time India.
On Sunday the Kuwait News Agency (www.kuna.net.kw) reported that the board of directors of Kuwait’s Zain Group (formerly MTC or Mobile Telecommunications Co. – www.zain.com) unanimously approved the sale of the group’s assets in Africa (except operations in Sudan and Morocco) to India’s Bharti Airtel.
The Kuwait Stock Exchange (www.kuwaitse.com) earlier on Sunday announced the suspension of Zain stocks until the group decides on sale of its affiliate in Africa. Shares in Zain were apparently up 23% since 4 February and rose nearly 4% on 11 February.
According to Reuters newsagency, Bharti had resumed its hunt for emerging market acquisitions after its planned $24 bln merger with South Africa’s MTN failed in September. There have been discussions of Zain group selling its assets in Africa since October.
Reuters says Zain is the third-largest telecoms operator in the Arab world. A consortium of Asian investors has been trying to buy a stake from Kuwaiti family conglomerate Kharafi Group for 2 dinars per share, or about $13.7 bln, reportedly for a 46% stake.
October 16th, 2009 by Tom Minney
The International Finance Corporation (www.ifc.org), a member of the World Bank Group, is investing $100 million into bringing the benefits of better telecommunications to many Nigerians via Helios Towers Nigeria Ltd. (www.heliostowers.com). HTN builds and maintains a network of telecommunications towers and leases space to providers of wireless telecommunications services.
According to an announcement on 13 October, the IFC is leading a $250 mln capital injection that will help Helios Towers increase its network to 2,000 sites nationwide. On 21 August, the IFC disbursed $50 mln in mezzanine financing and on 30 September 30 signed an agreement to lend another $50 mln in senior debt. IFC is arranging a further $150 million in senior debt from other commercial and development finance institutions. The towers and better coverage will help wireless operators roll out services more economically and extend affordable mobile services to the edges of towns and countryside.
The principals of Helios Investment Partners (www.heliosinvestment.com) founded HTN in 2005 to capitalize on very strong growth in mobile telephony in Nigeria by deploying the successful tower leasing business model pioneered by US-based companies such as Crown Castle International and American Tower. The business is characterized by high operating leverage, recurring revenues underpinned by long-term contracts, and high returns on invested capital.
Helios says in sub-Saharan Africa, the model exhibits the high growth characteristics of wireless communications and the defensive characteristics of a real estate business. According to the website, Helios and affiliated entities invested approximately $12 million and hold a majority interest in the company on a fully-diluted basis. Nigeria’s telecommunications sector has developed significantly, but 43% teledensity shows there is still room for growth. As HTN develops its network, operators outsource non-core activities and infrastructure and focus on developing products and services.
Kayode Akinola, HTN Director and Investment Principal at Helios Investment Partners says: “IFC’s long-term investment enabled us to leverage additional funding from capital markets, which is often not readily accessible for frontier markets,” said. “Nigeria remains one of the most high-growth telecom markets worldwide and wireless infrastructure sharing will continue to play a critical role in supporting operators in efficiently providing services to customers.” Helios aggregates more than $575 mln in capital commitments and also manages the $110 mln Modern Africa Fund.
Mohsen Khalil, IFC Director for Global Information and Communication Technologies, says: “Affordable mobile telecommunications enable access to knowledge and services, innovation across sectors, and more efficient delivery of government and business services, all of which will contribute to economic growth and opportunity creation.”
IFC supports sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. New investments totaled $14.5 bln in fiscal 2009, helping address the financial crisis.
September 24th, 2009 by Tom Minney
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.”
September 18th, 2009 by Tom Minney
Some US$8 billion was invested in developing Information and Communications Technology (ICT) in Africa in 2008. According to Nigeria’s Daily Independent newspaper (www.independentngonline.com) the Secretary-General of International Telecommunications Union (ITU), Hamadoun Toure, announced this at a recent African Telecom Development Summit 2009, held in Abuja, Nigeria, praising the advances of the last 10 years.
The report quotes Toure: ”It has been an extraordinary decade for Africa and it gives me great personal pleasure to see how the continent has taken huge steps forward in bringing connectivity to African people. Just ten years ago, virtually nobody in Africa had a mobile phone; today across the continent mobile cellular subscription teledensity has reached 32.6%, with some 250 million subscriptions in Sub-Saharan Africa” – creating enormous progress in Internet access.
Nigeria is the largest market, with over a quarter of all subscriptions. Toure says more than 30 mln Africans now have access to the Internet. Between 2000 and 2008, Nigeria alone has added 11 mln new Internet users, 40% of the new users in Africa. But Africa still lags in broadband access, with only 635,000 fixed broadband subscribers.
Toure is the first African elected as the Secretary-General of ITU, umbrella body of more than 700 telecommunications organizations. He called for developments in policy and regulatory frameworks and political will by African Governments to promote ICT roll-out.