Archive for the 'Telecommunications' Category
February 23rd, 2011 by Tom Minney
Leading international private equity firms are investing $79 million to build and acquire mobile phone towers in sub-Saharan Africa. Investec Asset Management (www.investecassetmanagement.com), the International Finance Corporation (www.ifc.org, a member of the World Bank Group), and the Netherlands Development Finance Company (www.fmo.nl) are taking equity in IHS Nigeria Plc (www.ihsnigeria.net) which says it is the largest provider of telecommunications infrastructure in West Africa.
IHS is reported to have more than 2,700 towers under its management and is still expanding its ownership and leasing operations throughout Africa. It has subsidiaries in Ghana, Sudan and Tanzania and employs 800 people, according to the website and is listed on the Nigerian Stock Exchange. IHS Executive Director, Issam Darwish, said in a report on the website that the fund would enhance telecommunications services in the country by breaking current barriers in the sector. Investec made the money available via its African private equity funds. The transaction is subject to regulatory approval.
According to the report, Darwish said: “IHS is dedicated to partnering with operators and investors across the African continent and is thrilled to add the IFC, FMO and Investec Asset Management’s private equity fund to our shareholder base. Since 2001, the company’s core strategy has been to serve the growing needs of the telecommunications operators in Africa and enhance the quality of the network performance.
“The investors understand the unique needs of the growing telecoms sector and the changing competitive landscape. The additional financing package also includes up to $115 million of IFC-led senior debt, mezzanine and syndicated loans, which will allow us to continue our leadership role in providing managed and co-location services to mobile operators and users in Africa.”
Darwish said IHS intended to bring down costs, expand coverage, accelerate technology rollouts and improve the quality of service for subscribers in Africa.
Last October, Nigerian President Goodluck Jonathan had called for more investments in the telecoms sector as Nigeria sought to become Africa’s telecommunications hub.
Yvonne Bakkum, Director Private Equity, FMO, reportedly said: “Access to telecommunications continues to be essential for the economic and social development of Africa. IHS increases the efficiency and quality of existing networks and helps operators accelerate network expansion into rural areas. FMO is proud to contribute to this through our investment in IHS, alongside Investec and IFC.”
IFC is a member of the World Bank Group and the largest global development institution focused on the private sector in developing countries. Andrew Gunther, Senior Manager, IFC Infrastructure and Natural Resources in Africa and Latin America, said: “Broadening access to affordable mobile telecommunications services remains a crucial part of development across Africa. IHS’ track record of improving quality while reducing costs will continue to provide savings that benefit all constituents of telecommunications in Africa.
“With this investment, IFC is helping improve quality of service, expand network coverage, reduce deployment, operating and usage costs – while accelerating the innovation that governments and operators can deliver throughout Africa.”
Investec Asset Management is one of the largest third-party investors on the African continent. It was established in 1991 and has grown into an international business managing approximately $80 billion (end Sept 2010). Mark Jennings, Investment Principal, Investec Asset Management: “IHS has a 10-year track record of profitable growth, is led by an energetic and experienced management team which includes the founders of the business, and is poised for substantial further growth which the new funding will assist. We are pleased to be associated with this dynamic business and team.”
In October 2009, the IFC invested $100 million into Helios Towers Nigeria Ltd. (www.heliostowers.com), set up by Helios Investment Partners as reported on this blog. HTN builds and maintains a network of telecommunications towers and leases space to providers of wireless telecommunications services.
February 14th, 2011 by Tom Minney
The Egyptian Exchange (www.egyptse.com) has decided to postpone its reopening until Wednesday 16 February. The stock exchange, based in Cairo, closed on 27 Jan after the main EGX 30 Index fell 16% in a week, and was due to open again yesterday (Sunday 13 Feb). The decision to delay the opening comes on the back of talks with regulators, stockbrokers and the Misr for Central Clearing, Depository and Registry (MCDR, www.mcsd.com.eg).
When the exchange reopens steps are expected to be in place to stop precipitous falls and price fluctuations. Many foreigners had sought to take out money and it is not yet clear how sentiment will shape up following the resignation of former President Hosni Mubarak on 11 Feb and the army take over pending democratic elections scheduled for six months time. The EGX says it is working on technical requirements needed to start trading as well as procedures to be used as soon as the trading begins. Telecommunications and Internet services may also have been disrupted.
The Wall Street Journal reported yesterday (13 Feb) that late yesterday the Central Bank of Egypt (www.cbe.org.eg) said that banks in Egypt will close on Monday and Tuesday due to workers’ strikes and the birth of Prophet Mohammad. Its emailed statement reads: “Amidst the strikes of worker in some authorities, including public banks … the central bank has decided to close banks on Monday Feb. 14 and Tuesday Feb. 15 on the occasion” of Prophet Mohammad’s birth.
Meanwhile schools and universities were reported to be reopening over the past weekend and many industries had said they were back and working close to normal by 7 Feb.
January 25th, 2011 by Tom Minney
Singapore Exchange Ltd (www.sgx.com) is planning to install what it says will be the world’s fastest trading system, reports the Wall Street Journal. The move comes as competition gets hotter among Asian exchanges for a bigger share of large investment sums being sent East.
The $195 million SGX Reach project aims to bring Asia a fast electronic trading platform similar to those in Europe and US. The paper reports that lack of competition and regulatory barriers had prevented Asia exchanges following the race for speed dominance of the US and European exchanges.
SGX, which also clears all trades, says the new system will reduce costs for customers and enable them to trade fast, with response time of 90 microseconds and the capacity to handle 1 million changes to the order book every second. The London Stock Exchange Group PLC’s Turquoise platform is currently the fastest in the world and has an average response time of 126 ms, according to figures from the LSE.
SGX global strategy
SGX’s bold strategy to raise its global profile includes pursuing an $8.4 bn deal to acquire the Australian stock exchange ASX Ltd. This would give the combined exchange more commodity trading, an area where Hong Kong stock exchange has also expanded.
Magnus Böcker, SGX Chief Executive, said in a statement that SGX Reach “will help Singapore leap ahead of other global markets as a centre for international fund-raising and investment”. He was previously the President of NASDAQ OMX Group.
Last week (18 Jan) it announced that it would eliminate the 90-minute lunch period to give more trading time.
The same day Hutchison Whampoa Ltd made an initial public offer on SGX for its ports business which aims to raise up to $6 billion. China-based companies don’t often bring IPOs to Singapore.
Also that day SGX reported 14% rise in second quarter net profit, mostly due to more trading volumes from major companies capital raisings.
In October 2010 it got approval for a joint venture with Chi-X Global Inc to become a market operator for an Asian-Pacific alternative trading platform, or “dark pool” (see previous blog story), where managers can trade large blocks of shares anonymously.
Also in October, trading began in American depositary receipts (ADRs) of 19 major Asian companies.
Regional competitors
Hong Kong Exchanges & Clearing (www.hkex.com.hk) was the top market worldwide for IPOs in 2010, raising $53,2 bn, according to Dealogic, while SGX was 16th, raising $6 bn. HKEx is the leader in China-related IPOs and it is reported that a Japanese company is seeking to sell shares there for the first time, and Chinese companies are busy raising another $2 bn. It also plans to extend the current 4-hour trading session to 5 hours a day from March and to 5.5 hours a day from March 2012. It aims to increase trading capacity tenfold at the end of 2011 by technology to handle 30,000 orders per second (scaleable to 150,000 orders per second if necessary) with average order response time of 9 milliseconds.
Tokyo Stock Exchange (www.tse.or.jp/english) is considering extending trading time by cutting 30 minutes off the lunch break, with a decision expected by early February. It is in process of replacing its trading system and is combining its futures and options trading in a new platform that will cut trading time by a multiple of 10.
January 7th, 2011 by Tom Minney
The dynamic Ethiopian Commodity Exchange (www.ecx.com.et) is further spreading its information feed, and now customers can access general information and their accounts through SMS and voice telephone (“Interactive Voice Receiver” or IVR) systems, according to an article in Ethiopia’s Fortune newspaper. This is an information feed, not the automated trading systems being installed by stockbrokers on the Nairobi Stock Exchangeas highlighted on 29 Dec on this blog, as ECX trading is still done on a physical trading floor.
One key aim of the ECX is to help Ethiopian agriculture become more efficient and productive by letting farmers all over the vast country get current information on what’s going on in commodity markets. The mobile phone systems should ensure that information is cheaply and quickly available to a wide range of farmers.
The new system cost Birr 1.2 million (USD72,500) and it lets customers anywhere retrieve general information, including Ethiopian and international commodity prices, and details of their personal accounts on the ECX trading floor. All the information divulged through IVR or SMS is obtained directly from the ECX’s market data system.
Information is available through either “push” or “pull” services within 2 seconds. Through the “push” service, subscribers are provided with information about transactions as each deal is completed on the ECX trading floor. The mobile phone text messages include the volume of commodities transacted and the corresponding value (price).
The “pull” service means that subscribers send text messages to request commodity prices, the price difference from the previous day’s listings, and the volume sold. Both suppliers and buyers can use this system to access their personal account information. The IVR system is accessed by username and password.
The newspaper quotes Ahadu Woubshet, chief officer of Market Data for the ECX: “The seller or supplier will be able to find any information about their product in the warehouse. The buyer will also be able to view his ECX account information at any time and place.”
The ECX, which started trading coffee in April 2008, and long been disseminating information via price tickers onto electronic display boards and its website; as well as radio, television, and print media. From the start there were 30 price tickers in different parts of Ethiopia.Ahadu told Fortune: “The tickers helped create change in the quality of exported goods. Once farmers learned that prices depended on quality they started focusing on that.”
Since then the ECX has added 150 electronic display boards, produced by Wavetec, a Dubai company which has done similar work for the Dubai Financial Centre and 11 stock markets in Africa, including South Africa’s 2 SAFEX markets, now part of the JSE Ltd. Seven display boards are in the ECX’s headquarters (central Addis Ababa) including a 29 metres board on top of the building.
The full cost of the project is included in a loan from the World Bank (www.worldbank.org) under a “Capacity Building Programme of Latest Information Dissemination System Project”.
Fortune reports that Achim Fock, senior economist at the WB Ethiopia Office and task manager of the bank’s Rural Capacity Building Project, said: “The WB dedicated about USD7 million to support and modernise the ECX’s operations”.
Apposite LL Co., a company reportedly incorporated in the US in October 2007 which opened its Ethiopia branch in December 2007, installed the new IVR and SMS system for Birr 0.5 million, after beating a wide range of other shortlisted firms. Ethio-Telecom was paid Birr 750,000 for installing the service. The system was supposed to go live in October 2009 but implementation took longer than planned.
Fortune quotes Adam Abate, managing partner of Apposite: “We delivered the design of the system in a short time. However, the contractual and the system integration process with Ethio-Telecom (then Ethiopian Telecommunications Corporation) took longer than expected. The integration of the SMS and the IVR system, billing arrangements, and extending a fibre connecting the system to the ECX’s headquarters were some of the processes that took so long.”
The pilot phase was launched in late December and Ethio-Telecom has made 36 IVR lines available under the telephone number 929. These lines can service 1,000 people per hour.
“The company has promised to increase the lines to 100 by February 2011, which will increase the system’s capacity to service 20,000 people daily,” Ahadu told Fortune.
December 22nd, 2010 by Tom Minney
Tunisie Telecom (www.tunisietelecom.tn) has announced the first stage of registration with the aim of listing on the Tunisian stock exchange Bourse de Tunis (www.bvmt.com.tn) and NYSE Euronext Paris (www.euronext.com). It filed a 555-page reference document filed with regulators Conseil du Marché Financier in Tunis (www.cmf.org.tn), and also with French financial markets regulator Autorité des Marches Financiers (www.amf-france.org) on 17 December.
The filings are the first steps towards an Initial Public Offering (IPO) of shares on the Tunis and Paris stock exchanges, subject to market conditions and approval of the IPO prospectuses by the two regulators.
Tunisie Telecom is the incumbent telecommunication network and service provider and offers fixed, mobile and satellite telephony services and ADSL services to residential and business subscribers through five Internet Service Providers. It is 65% owned by the Government, but in May 2006 a consortium of Dubai’s TECOM investments and Dubai Investment Group acquired a 35% shareholding.
On offer will be a reported 20% of the shares, half each from the Government and from TECOM-Dubai, according to a useful story by Reuters newsagency, citing Tunis bourse Chief Executive Mohamed Bichiou. The listing could be planned for the first quarter of 2011.
Tunisia’s population is about 10 million and it has an open business climate and moved fast to adopt third generation 3G mobile technology. The telecoms market has expanded this year, after France Telecom started fixed and mobile operations. In September 2010, Tunisie Telecom was awarded the second 3G licence reportedly after paying about $80 million. It joins France Telecom’s local unit Orange Tunisie which had the first 3G licence.
Reuters reports that in November, Egypt’s Orascom Telecom sold its 50% stake in another Tunisian mobile operator Tunisiana for $1.2 billion. The buyer was a consortium that included Qatar Telecom’s Kuwaiti unit Wataniya and which already owned 50% of Tunisiana.
The IPO will be the biggest on the Tunis exchange in recent years. Tunisia’s emerging equities market has been increasing its profile this year, and this will be enhanced by the Paris dual-listing, Reuters reports that the previous foreign listing by a Tunisian firm was on Morocco’s stock exchange.
The reference document includes IFRS accounts for the years to December 2007-2009 and provisionals to September 2010.
December 3rd, 2010 by Tom Minney
Telecoms giant Safaricom Ltd. (www.safaricom.co.ke), a mobile phone company that is the biggest listing by market capitalization on the Nairobi Stock Exchange (www.nse.co.ke), is selling KSh 4.49 billion shillings ($56 million) of 5-year bonds from 1 Dec, according a report on Bloomberg newsagency.
The agency reports an email statement that the fixed-income securities will pay a coupon of 7.75% a year, the Nairobi-based company said in an e-mailed statement today. “Interest will be paid semi-annually in arrears beginning May 2, 2011.
The bonds will start trading on the NSE on 17 Jan.
Safaricom Public Relations Officer Wachira Kang’aru told Bloomberg the floating-rate coupon is the prevailing 182-day treasury-bill rate plus 185 basis points. Bloomberg reports the Central Bank of Kenya as saying on 25 Nov that the weighted average rate of accepted bids for the T-bills was 2.464% at the most recent auction, while the cut-off rate was 2.8%.
On 7 Oct 2009, Safaricom announced a KSh 5 billion (US$67 mln) bond, also pegged to Central Bank of Kenya rates. It said it was the first tranche of a KSh 12 bln programme approved by the Capital Markets Authority (CMA). The offer was aimed at institutional clients, and closed on 29 Oct 2009.
September 20th, 2010 by Tom Minney
Kenyan venture capital company East Africa Capital Partners Ltd (www.eacp.co.ke) is to begin raising its second fund next year, with a target size of USD250 million, after its success in fully investing $100 million of the first African Technology, Media and Telecommunications (ATMT) fund. The new fund is to focus on information technology, media and real estate.
In an email to African Capital Markets News, EACP chief executive officer Richard Bell says: “We’ve bet on our view that growth in mass market “home entertainment” in the next 10 years in Africa will be what mobile phones were to the last”.
On technology, the plan is to build massive data centres, generate clean energy to power them, and stimulate the creation of an outsourcing cluster in East Africa. We believe that East Africa is set to become Africa’s ICT Hub.
On real estate, Bell says “Africa is the fastest-urbanizing society in the world.
Africa’s emerging consumer class needs massive amounts of housing”. He says Kenya, for example, needs 250,000 homes a year and is only building 30,000. “Amongst other things our real estate strategy aims to make a dent in that supply-side bottleneck.”
Much of EACP’s Fund 1 investments were channelled through Wananchi Group Ltd. (www.wananchi.com), an Internet and cable television company. EACP has a 51% stake through its ATMT I Fund.
Last month (August 2010) Wananchi and Cisco announced a multi-year contract to roll out “triple play” (broadband, multichannel cable television and voice telephony) to 9 countries in East Africa: Kenya, Uganda, Tanzania, Rwanda, Burundi, Malawi, Ethiopia, Sudan and Zambia. According to the press release: “The contract will enable Wananchi to deploy Cisco’s integrated end-to-end network technology solutions, encompassing Cisco’s Borderless Networks, collaboration and data centre virtualization solutions, as their customer base expands and technology advances.”
According to a report on Bloomberg, Bell says: “We have invested in 10 new TV channels,” he said. The sports channel has started operating while the others will go live over the next month. “In Africa, what you have is satellite TV for the elite. What we are introducing is pay TV for the mass market.” The venture Zuku TV (www.zuku.co.ke) was introduced in October 2008.
The penetration of pay TV in developed economies is estimated at 70-80% compared with 20% in emerging markets, he said and expects this to grow fast over the next 5 to 10 years, if the market gets “the right product at the right price,” he said.
Private Investors, Export Development Canada and the US Government’s Overseas Private Investment Corp. (www.opic.gov) have invested a total of $90 million in Wananchi to date, while Emerging Capital Partners LLC (www.ecpinvestments.com), a Washington-based company that owns 49% of Wananchi, has invested $25 million, according to the report.
Bell told African Capital Markets news that ATMT Fund 1 was basically a TMT infrastructure fund. “Even though we have used Wananchi as the conduit for all of our investments from this fund the investments themselves are quite broad and include:
(1) SimbaNet – corporate voice and data business services
(2) Wananchi Telekom – through which we have invested in the undersea fibre-optic cable TEAMS, and a number of terrestrial cables dark fibre leases to create a international and long distance carrier of carriers business.
(3) iSat – a specialist VSAT and satellite business
(4) Zuku Cable – a mass market retail cable TV business that is deploying triple play across all the major towns in East Africa.
(5) Zuku Satellite – a Direct-To-Home (DTH) Satellite TV business
(6) Wananchi Programming – a media and content business that is building initially 10 new TV channels including a sports channel, a general entertainment channel focusing on African content, a documentary channel and 6 new movie channels.
May 31st, 2010 by Tom Minney
Interest in African sovereign debt has been climbing again in recent months. Angola has stil not issued a $1 billion – $2 billion benchmark bond due in May. However, Kenya, Nigeria and Mauritius and many other countries have flourishing debt markets and international interest is good in high-yielding hard-currency bonds such as those issued by the Republic of Congo and Cote d’Ivoire.
In April top bond broker Exotix (www.exotix.co.uk) gave a “buy” recommendation on the REPCON 2.5% bond, redeemable in 2029. Then it was trading at 57.0 and offered a yield of 10.8% and was the highest-performing African sovereign bond.
Trading in $2.4 billion of Cote d’Ivoire debt in US dollars trading under New York law (2.5%, redeemable in 2032) began in mid-April, after the country exchanged it for Brady bonds it had defaulted on nearly a decade ago. Exotix only rates it a “hold” at 64.2 in mid-April, when it yielded 9.6%. The bond was expected to make up 0.75% of the $400bn Emerging Market Bond Index (EMBI), according to a recent article in The Banker, and many were expected to buy it for this reason. Exotix commentary on the bond included detailed assessment of politics and economic developments including current account surpluses and International Monetary Fund assessments.
Governments in some countries are seeking to create longer-term yield curves for domestic investors, in order to provide a framework for longer-term finance and investment. For instance Barclays Kenya is offering 20-year mortgages, compared to a few years ago when the limit was 5 years. Bonds are also being moved into electronic trading and being handled by central depositories.
According to a report on 19 May on Bloomberg, Angola was awarded credit ratings of B+ by Standard &Poors and Fitch, 4 levels below investment grade, and Moody’s assigned an equivalent ranking of B1, putting Angola on par with Nigeria, Lebanon, Belarus and Ghana. The country plans to issue $1billion – $2 billion in bonds this year.
Other high-yield bonds, including in local currencies, can be found in Tanzania, Zambia, Ghana and Kenya. Economic commentators are encouraged, as debt can be a more cost effective way to fuel long-term economic growth than equity.
Better economic management and good investor interest in government debt has paved the way for more corporate bonds, including for power and telecommunications infrastructure. This site has already reported how Kengen and Nampower have issued bonds to fund urgently needed power expansion. Telecommunications giant Safaricom has also been successful.
The successes are tribute to the increasing quality of economic and fiscal management by African governments.
March 16th, 2010 by Tom Minney
FROM SECURITIES AFRICA/CITIBANK 5TH ANNUAL AFRICAN INVESTMENT CONFERENCE, LONDON
Kenya’s biggest mobile telecommunications company says it will continue to lead the market through its revolutionary mobile payment system M-PESA – already the world’s most successful with 9 million users – and through moving fast into data. Safaricom (www.safaricom.co.ke) has 78% market share (83% by revenue) and 15.2 million customers, according to Les Baillie, Chief Investor Relations Officer, and it will be hard for its competitors to catch up.
M-PESA, which allows people to do cash transfers using their mobiles, was originally started as a customer loyalty tool, but has soared ahead in proving the value of the mobile phone in bringing financial services to Africans. Now 22% of Kenyans are signed up as users and use it for a range of functions including paying their water and electricity bills, receive their share dividends (Safaricom paid 150,000 shareholders their dividends this way) and even buy airtickets and make international transfers, all using the mobile handset. M-PESA has 17,500 agents.
Non-governmental organizations are using it for payments in remote areas and it is increasingly being used as a way for microfinance institutions to make and collect loans. Future developments could be to use M-PESA as a tool to link people with small savings to banks and savings institutions, providing new opportunities for the unbanked to gather assets and interest, and to offer micro-insurance, etc. International transfers are reaching remote parts of Kenya through tie-ups to Vodafone and Western Union. M-PESA employs 12,000 including agents, but the knock on effect in terms of small enterprises in remote areas could be many times more.
Mr Baillie told institutional investors at the conference, organized by stockbrokers Securities Africa and Citigroup, that the core of Safaricom’s competitive strategy is to keep the voice customers happy “by offering the best network, the best coverage, the best services and other offers to subscribers to make them stay with us, including the bongapoints and competitions.”
He says as they drive into rural areas, the revenues per customer are dropping. Kenyans like to buy in small denominations, partly due to cash shortages and Safaricom now offers top up cards in KSh 5 denomination (approximately US cents 6.5).
Safaricom’s second strategic drive is data, boosted by the undersea cables which reached Kenya and offer massive opportunities, According to Mr Baillie, Safaricom have invested KSh1 billion ($130 million) into upgrading networks, including the only licence for the fast 3g data network technology and extensive investments into Wi-max networks. Some 500 sites have been upgraded to 3g and 100 are active Wi-max sites.
He says they offer companies a full range of solutions, and one of the top areas of growth will be small and medium enterprises as well as major companies such as banks which are starting to move back into rural areas as they find ways to do sustainable business there. He says they have 2 million data users and are one of Kenya’s biggest sellers of laptop and notebook computers as they can sell at cost, since their revenues will come from data usage. However, currently 90% of internet users are still using their mobiles and rapidly moving into internet technologies such as social networking.
Safaricom still believes customer service is its core, with 1,000 agents working at its call centre, one of the biggest and best in East Africa. It is also seeing how its Internet portal can stimulate growth. Safaricom hopes to remain number one and it seems hard to see how its competitors (nearest is Zain with 3 million customers) can catch up.
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.