US – Africa: Why Washington is driving Africell’s revival

By Quentin Velluet
Posted on Friday, 5 November 2021 19:04, updated on Monday, 8 November 2021 13:29

In order to gain a foothold in Angola, a market of nearly 33 million inhabitants which is now considered a priority, Africell has made the strategic decision to leave Uganda © Vincent Fournier/JA

Telecoms operator Africell, which wants to relaunch itself in the DRC and break into Angola, is receiving strong support from the US. This is just the latest example of Washington and Beijing’s struggle for influence on the continent.

A photo shows two men sitting side by side in the living room of the suite where DRC’s President Félix Tshisekedi stayed during his visit to New York for the UN General Assembly at the end of September. The one on the left is Ziad Dalloul, the American-Lebanese founder and boss of the telecommunications group Africell. His hands are clasped and he has a somewhat withdrawn expression. On the right is Peter Pham, former ambassador to the Trump administration. He sports a collared shirt, adorned with an irremovable bow tie, and is engaged in a conversation with the Congolese president.

The picture, available on the Twitter account of the ex-ambassador, speaks volumes about Africell’s new relationship with the US government. President Joe Biden’s administration seems to have decided to make the telecoms group one of its tools of economic influence on the African continent.

Translation: DRC Presidency

#DRC #UNGA2021 23.09.2021/ #NewYorkCity

The Head of State met with Peter Pham @DrJPPham, the former US special envoy for the Great Lakes region and then the Sahel. He praised President Tshisekedi’s leadership of the AU and his work in the DRC

$205m raised in three years

This impetus on the part of the US administration comes at a time when Africell is undergoing a renaissance. 20 years after it was first established in Gambia, the operator now boasts of 12 million users in three markets. In Gambia, it is the leader as it has 1.6 million more users than Comium (a group also present in Liberia and led by Nizar Dalloul, Ziad’s brother), QCell and Gamcel. In Sierra Leone, according to GSMA, it is in first position behind Orange, ahead of QCell and Sierratel. In the DRC, it ranks in 4th place behind Vodacom, Orange and Airtel.

This increased understanding with Uncle Sam, coupled with its departure from Uganda at the beginning of October, should enable it to prepare for its December launch in Angola, the fourth country of operation.

Favoured by Washington, Africell can also count on the support of the powerful US International Development Finance Corporation (DFC) – which spearheads US economic diplomacy – with which it contracted a loan of $100m in 2019.

This sum brings the total investment plan to $135m over five years, and includes upgrading the existing fleet of telecom towers, installing new infrastructure, acquiring a 4G licence in the DRC and refinancing the group’s debt by $40m.

This vote of confidence helped attract a syndicate of financiers in June 2021, including Gemcorp, Gramercy Funds Management, TC Credit Partners LLC and other funds advised by Helios Investment Partners, thus securing an additional $105m loan.

A new face

Initially based in Beirut, Africell has – until now – suffered from the reputation of being an exclusive operator, mainly present in urban areas, and of having ambiguous political relations – in particular, with Lambert Mendé, the DRC’s former telecommunications minister during the Kabila years.

Now, its managers are determined to present it as a US company. We are “based on the British island of Jersey, with an operational headquarters in London, and our capital is 95% owned by US citizens,” says a spokesperson for Africell.

It is now common knowledge that he is rebalancing the country’s relations in favour of the US.

As if to seal this partnership, Pham was appointed to the Africell board in June 2021. This Republican was the former director of the US think tank Atlantic Council’s Africa department and also sits on the board of the British mining company Rainbow Rare Earths Limited as well as that of the National Museum of African Art in Washington.

“I met Ziad Dalloul when I was not yet in government,” the former US special envoy to the Sahel tells us. “We were introduced by mutual friends, and I immediately appreciated the spirit and philosophy of his group and his social commitment, which goes beyond what is even necessary for his business,” he says.

The US ambassador’s affable and somewhat exuberant nature almost makes one forget that Africell hired him within the context of the techno-economic war that the US and China have been waging for the past three years. “Only those who are hopelessly deluded deny reality,” he says when asked about this.

In addition to helping finalise the contract with DFC, which in theory prohibits Africell from purchasing Chinese telecoms equipment, the US ambassador is also there to open the doors to countries on the continent that show a desire to get closer to Washington.

Angola and the DRC, two markets to develop

The DRC, which has over 80 million inhabitants, is one of them. Africell has been present in the country since 2012, even though its market share has stagnated for several quarters, despite a 10% increase in revenue in the past four years, according to data provided by the company. However, the financial boost that the operator received from the US is currently enabling it to upgrade its existing network and enter two new provinces.

On 18 October, a meeting between the DRC’s Prime Minister Jean-Michel Sama Lukonde Kyenge and an Africell delegation, consisting of Dalloul, Pham and the rest of Africell’s board of directors, was held to announce that the network would be expanding to Kikwit and Bandundu, Kwilu province, and Kasai province. “We are going to double the size of the network in Congo,” says Ian Paterson, the group’s investment director.

In Central Africa, many observers were surprised that the company, which employs 1,000 people on the continent, was awarded the operator’s licence in Angola. Here again, US support was decisive. “I welcomed João Lourenço to Washington long before he became president. He has been a very engaged defence minister with the US and knows our policies. It is now common knowledge that he is rebalancing the country’s relations in favour of the US,” says Pham.

Africell has prioritised this market of nearly 33 million people, so much so that it even decided to leave Uganda so that it can carry out a “strategic repositioning [with] the aim of freeing up resources to fuel Africell’s future growth in other African markets, such as Angola,” a spokesperson for the group tells us.

Mobile money and 5G

Although Africell is recovering, it will nevertheless have to quickly seek new financing so that it can sustain itself in the long term. “The strategy of a number 4 in the DRC is complicated, given the investments required to cover the country,” says a telecoms veteran who has turned to consulting.

For his part, and without revealing anything, Pham has provided assurances that the group is working on new financial contributions. “They may have all the money in the world, but without an excellent operational team capable of executing a conquest strategy, they won’t get very far,” says the head of a rival operator.

In Kinshasa, the outsider’s offensive has however started to change the rules of the game. “All the operators have adapted their offer of 1 gigabyte (GB) of mobile data valid for 48 hours, in response to Africell’s offer. They have also all lowered the price of the 30GB monthly offer from $30 to $20, the same price as Africell,” says a local telecoms insider.

In addition, although it used to lease capacity on Airtel’s network, Dalloul’s operator now runs its own network of relay antennas provided by Huawei. The company is aiming to increase its number of fibre-to-the-home (FTTH) offers in partnership with Congolese company United SA, which has a fibre optic operator licence. “This strong opponent has so far failed to make much of an impact, but with this latest move, it is seriously tackling its three competitors,” says our Congolese contact.

In view of its global roadmap and still modest position in Africa, Dalloul’s group should continue to operate as a low-cost operator that listens to its users’ daily needs. “In Gambia, they were trying to find out what people really needed for a while. Rather than offering discount points through a loyalty programme, they supplied tools or carts,” says a French expert who advised the group.

The latter also plans to accelerate mobile money with its Afrimoney service, led by Andy Widmann from London and hosted by the Indian platform Comviva. In Angola, Africell has been tasked with preparing a 5G network, although this type of technology is not a priority in African markets, where the current challenge is to switch users from 3G to 4G.

“We are investing hundreds of millions of dollars in [this project] in Angola. We have already announced technology partnerships with Nokia, Oracle and Aviat, and we will soon be announcing others,” says Christopher Lundh, director of Africell’s subsidiary in Angola. These ambitions are akin to conquering the West, the aim of which is to make the all-powerful local operator, Unitel, tremble.

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