Diversification, key driver for Africa’s telcos

As Africa’s telecom sector continues to grow, the pressure to diversify products surges and more innovation drives the next investment priorities of telcos.  

As experts in fact put it, the pressure to diversify revenue streams is expected to be one of the key driving factors for M&A transactions on the continent that is embracing technology slightly faster.

“As organic growth can be slower, we’ll see telcos acquiring companies in other sectors such as fintech and digital services and technologies. The fintech industry remains very fragmented and keeps on attracting a large number of companies in Africa,” said Mohamed Dabbour, EVP, Head of Africa at Millicom.

Telecom infrastructure is another sector that has enjoyed a tremendous amount of activity over the past few years and it is expected to continue to do so due to the increasing demand for data.

“I believe we will continue to see infrastructure consolidation, as FTTH and FTTB gather more momentum in many African markets where fibre infrastructure is still developing,” said  Byron Clatterbuck, CEO of South African submarine cable and fibre company SEACOM. 

Datacentres, both large and small, will continue to attract investment, he says.

Accoridngly, a few select markets are underpinning the main bulk of transactions and investment activity across the region.

Key markets to note are South Africa, Nigeria and Kenya which are among the most active, while Ethiopia is opening its telecom market and is expecting new investors to target the country.

Other markets that are expected to show progress in terms of diversifying revenues is Rwanda, which after its  initiatives to   build  technology infrastructure is now  embracing digital wallets as well as platforms that would facilitate transaction across financial sector players.  “Research suggests that African private equity activity has remained stable over the past seven years, which indicates that investors are confident in the long-term feasibility of the continent.” Said Stephane Duproz, CEO of Africa Data Centres