Wednesday, 8 August 2012

July 2012 Africa Investment Map - Welcome to the North

Despite the fact that half of the investor community are on vacation, July was a good month for African telecoms, with $2.5Bn of new infrastructure investments announced.

Two things stand out. Firstly, the reawakening of the north African telecoms sector in the wake of the Arab Spring. As stability returns to the major markets, investment is coming with it. In July, Vodafone committed $50Mn to core network upgrades in Egypt. In Algeria, Mobilis will invest $1.7Bn over five years to upgrade and extend their mobile network.

North Africa led investment in the continent up to the point that the revolutions started in early 2011. If they are to maintain competitiveness and exploit their geographic location then more investment will be required to enable ICT development and economic growth. I expect further big announcements before the year is out.

The second characteristic of July was the large volume of spats and court cases that broke in the month. In Swaziland, MTN demanded $100Mn from the incumbent telco in recompense for a failed mobile operation. In Zimbabwe, Econet claims to be owed $85Mn of interconnect fees by Telone and Netone. In Tanzania, Vodacom's local MD launched a scathing attack on the government over the cost of spectrum and the poor quality of national power and transport infrastructure.

With all the money in African telecoms and the comparative underdevelopment of governmental and civil systems, the reasons for repeated fallings out are obvious. But they can't be allowed to impede progress. Governments in particular need to understand the need to create a stable platform for their ICT infrastructure to develop on. If they don't, then their ability to compete with other developed and emerging nations will be ever-stiffled.

To that end, I'll end on positive news. This month, MTN in Nigeria signed a contract with Ericsson to deploy the continent's first all-IP cellular network core; a technology that will enable a new generation of services to be provided to citizens of the continent's most populous country.

Aside: later this month I hope to release my first telecoms investment map for Latin America, a market that is logically comparable but compellingly different to Africa. We shall see whether that task survives contact with my day job!

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