Africa’s telecoms sector needs boost
Africa’s telecoms industry needs a fresh boost to continue its stellar growth, which has attracted interest from buyers in Europe, the Middle East, India and China, according to a report prepared for a regional conference. African telecoms industry leaders gather in Cairo this week, just as a possible tie-up between MTN Group and Indian cellphone company Bharti Airtel puts the continent into the spotlight.
More than 5 000 visitors from 75 countries, including dozens of senior executives, regulators and politicians are expected today in the Egyptian capital for the International Telecommunication Union’s (ITU) Telecom Africa conference, which runs through Thursday.
Just four years ago, an ITU report estimated that under the most optimistic scenario it would take until 2010 for cellphone subscribers in Africa to exceed 200 million – a number that markets raced past already last year. Africa now counts more than 250 million customers, but a report prepared for the conference says policymakers need to remove obstacles to further growth.
The report notes that most countries where cellphone performance is poor in relation to per-capita income have limited competition.
Eritrea and Ethiopia have the lowest cellphone users relative to their population on the continent – and only one carrier each – while Liberia, with a lower per-capita income, has four cellphone operators.
Governments must strengthen regulators, privatise dominant state-owned carriers and allow more competition and private sector investment, says the report.
From Vodafone Group of the UK to France Telecom, carriers from industrialised nations have bought into Africa’s high-growth markets, but firms from other emerging markets have also been active.
Kuwait’s Mobile Telecommunications bought Celtel for $3.4 billion (about R26 billion at current exchange rates) in 2005 to enter sub-Saharan markets and the firm has been aggressively expanding.
Bharti and MTN said last week they were in talks which might lead to a deal, and the Financial Times reported that Vodafone and India’s Reliance Communications were likely to be interested in MTN.
China Mobile had said it was eyeing the South African market, but the company has not bid for MTN.
China and India are battling for resources to drive their roaring economies, and are going head-to-head when it comes to cross-border acquisitions in fast-growing firms.
Some financial analysts, however, have questioned the value of deals in emerging markets, noting that synergies have been hard to find, with the exception of bigger purchasing power with handset and infrastructure suppliers.
Internet access will be another focus this week.
Many in the industry believe Africa should embrace mobile broadband – which delivers internet access via third-generation cellphone networks or other emerging technologies, such as WiMax – instead of fixed lines.
Business Report
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