October was a $900m month for African telecoms investment, with mobile and backhaul infrastructure benefiting most from a sudden upsurge in activity.
The biggest news on the continent was probably Vodacom, MTN and 8ta taking LTE live in South Africa. Third player, Cell C have also promised LTE before the end of 2012. As I mentioned in a previous post, LTE is slowly entering African markets although take-up will remain very constrained by the cost of end use devices for the foreseeable future. I also worry about the risk of returning to a communications infrastructure that it not compatible between countries. Chinese standards for LTE – proposed in a number of countries – won’t interoperate with the versions found in Japan, Korea and the West. Since it is business users that are most likely to use LTE in the early days, I worry that this will act as a small brake on intra-continental trade.
There were two big stories in Kenya, where Safaricom is spending $161.7m to install 1,800km of fibre backhaul into its core network. At $90,000 per km, this is nearly three times the average per-km pricing for African fibre installs, which suggests that a whole lot of switching and other IT kit is wrapped up in that number. Losing such a big customer – Safaricom spends about $25m a year leasing fibre off Telkom and Jamii – will be hurtful to those operators, who’ve bet significant sums on long term operator traffic deals over the last few years.
In less positive news, Airtel are considering scaling back their investments in their Kenyan operation due to an unfavourable settlement on termination rates. Yet another example of how flawed regulation and legislation is holding back the continent’s former leader in the sector.
Finally, in a move likely to get investors juices flowing, Vimpelcom has announced that it’s considering selling off its mobile operators in Africa. The operations in Burundi, Zimbabwe and the CAR should all interest MTN, who’ve made no secret of their desire to grow their footprint in Africa still further. One to watch.