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Posted on Wednesday, 19 February 2014 13:00

African Telecoms: Much more to do to reach the masses

By Gemma Ware

Photo©ReutersHigh-speed internet for corporate clients is the big opportunity this year, but to extend mobile penetration to first-timers, prices will have to fall.

As merger momentum has grown in the global tele- com sector, Africa has not been left out.

In 2013, France's Vivendi finalised a deal to sell its 53% share of Maroc Telecom (#46) to the United Arab Emirates group Etisalat for $5.7bn.

It remains to be seen how Etisalat will position the newly acquired operations, many of them in Francophone West Africa, alongside its operations in Nigeria.

Other deals could be on the cards soon.

French group Orange confirmed to our sister magazine Jeune Afrique that it is re-evaluating its operations in Africa.

The turnover of the 34 telecoms companies on our Top 500 list stood at $77.6bn, contributing 10.5% of the total.

Turnover grew by 2.1% between 2011 and 2012.

Africa still has a long way to go with mobile penetration. A 2013 report from the GSMA found the continent had 253 million unique subscribers.

That means the mobile penetration rate is just 31%.

Peter Lyons of the GSMA says prices will have to drop in order to attract new customers.

"Now it's $13.6 average revenue per user [per month]. The next 200 million to 300 million customers are going to be significantly below that," he says.

Speed means business

Helped by the arrival of high-speed broadband, big firms will target corporate clients.

In August 2013, South Africa's MTN Group (#4) rolled out its MTN Cloud Services to target smaller companies in Nigeria, Ghana, Zambia, Uganda and Côte d'Ivoire.

Vodacom Group (#11) also has its sights on corporate clients.

Telkom (#38) is gearing up for a battle in February, when public hearings are due on local loop unbundling, a process whereby the South African state-owned incumbent will be forced to allow other operators to use its fixed-line infrastructure.

Governments are trying new ways to tax the telecoms sector.

In Kenya, Safaricom (#110) complained about a 10% levy on mobile-money transfers introduced in late 2012.

Safaricom officials said the move caused it to absorb costs of $4.6m in 2012 and 2013.

Still struggling to make its investment profitable, Indian firm Bharti Airtel is looking to sell its African infrastructure.

The sale of approximately 15,000 towers could help reduce its debt burden.

Airtel now has seven of its African subsidiaries on the Top 500 company list, the same number as MTN. ●

Busy year ahead for the South African comms giant

In September 2013, Vodacom Group (#11) announced it was in exclusive talks to buy fixed-line operator neotel.

Chief executive Shameel Joosub said the fibre it would acquire would allow it to "develop entirely new services such as fibre to the home and business".

Vodafone is cash rich after it sold its 45% stake in United States (US) operator Verizon Wireless for $130bn in September 2013 – $10bn of which it put into an investment pot for 'project Spring', which could include South Africa and tanzania.

But speculation mounted in late 2013 that US firm AT&T was eyeing a takeover of Vodafone, which owns 65% of Vodacom.

Some analysts said this could lead AT&T eventually to sell Vodafone's African assets, with Orange mooted as a potential buyer.

A spokesman for Vodacom said this speculation was "totally unfounded".

With MTN, Vodacom faces new regulations in South Africa that will drop the mobile termination rate (the money one operator pays another for terminating a call on its network) from R 0.40 ($0.04) to R 0.20 by march 2014, and R 0.10 in 2016.

The move favours smaller operators such as Cell C and 8ta. ●

For a full list of Africa's Top 500 Companies, get a copy of the February issue of The Africa Report, on sale at newsstands, via our print subscription of our digital edition.

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