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African telecoms investments - December 2011

$723Mn of investments in African telecoms infrastructure were announced in December 2011, taking total publicly released investments for the year to $10.2Bn. Towers remain a hot market, with American Tower and Vodacom investing a total of $264Mn for a Ugandan towers joint venture. My estimate is that American Tower paid about $175,000 per tower, which looks like a good deal for Vodacom - $100,000 is the mean value for towers in comparable African markets this year and the only emerging market deal to top this was American Tower's almost simultaneous acquisition of 2,500 Pegaso PCS' towers at $200,000 per unit in the much larger and more mature Mexican market.

If this Uganda deal was the largest of the month, probably the most important news was Cameroon's activation of 10GBit/s of metro fibre in the second city of Douala. This upgrade from the previous 20MBit/s loop should have massive benefits for the public and service sectors in the city. I think that this kind of small but impactful upgrade by state and telecoms companies will be commonplace in 2012. Even if it only advances the cities in question to the standard of a regional town in the developed world, the benefits from such a low base are huge. Returns for private investors should also be excellent; or at least better than yet more dollars flowing into the over-competitive and over-invested consumer mobile market.


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