After some years of operations, many
telecommunications companies are considering selling some of their African
subsidiaries, largely due to concerns around sustainability and profitability, ITRealms reports
According to global technology
research and consulting firm, International Data Corporation (IDC), these challenges
have led some global telcos to reconsider their plans for the region. Africa
may well be the next frontier for growth but a number of major players have
encountered serious challenges around the profitability of their investments in
trying to establish a sustainable and economically viable footprint on the
continent.
Etisalat Group, for example,ITRealms gathered, entered into an agreement in 2014 that saw Maroc
Telecom acquire its subsidiaries operating under the Moov brand in Francophone
West Africa (i.e., Benin, Central African Republic, Gabon, Ivory Coast, Niger,
and Togo).
The deal also included Prestige Telecom, a company based in the
Ivory Coast that provided IT services to Etisalat's operations in the six
aforementioned countries. The move was spurred by the steadily declining
revenues that Etisalat was pulling in from its international subsidiaries, with
all of its West African operations (including Nigeria) contributing just 7 per
cent to its overall revenues in 2014.
In another development, BhartiAirtel
entered 15 African markets in 2010 after acquiring Zain's subsidiaries on the
continent, and has since expanded into two more markets.
However, after five
years of operations, the telco is considering selling some of its African
subsidiaries, largely due to concerns around sustainability and profitability.
Indeed, Orange is currently in talks with BhartiAirtel to acquire four
subsidiaries in Francophone and Anglophone Africa (i.e., Burkina Faso, Chad, Congo
Brazzaville, and Sierra Leone), ITRealms learnt.
"The poor level of
infrastructure, particularly in relation to electricity supply – is one of the
key challenges that telcos encounter when it comes to deploying and maintaining
top-quality network operations in Africa," said the director of IDC's
telecoms program for the Middle East, Africa, and Turkey, Paul Black.
"This issue has consistently
affected the profitability of telcos due to the increased levels of capital and
operational expenditure they must undertake in building and maintaining a
passive telecom infrastructure. Some global telcos have also failed to adapt
and implement strategies that have succeeded in other regions. Indeed, the
majority of global telcos have been unable to localize their global strategies
to suit the unique operating environments of the African market."
"The operational challenges
facing telcos in Africa have driven growth in the continent's third-party
telecommunications infrastructure management business, and IDC expects the
pressing need for telcos to reduce their costs and increase their levels of
control to sustain growth in this space," continues Black.
"In order to increase the
likelihood of success, telcos wishing to pursue growth and expansion in the
African market must focus on developing enterprise products and services that
appeal directly to the wants and needs of the local market, and to small and
medium-sized businesses in particular. Telcos looking to enter Africa should
tailor strategies that have succeeded in other regions to the specific
operating environments they encounter in Africa, while the mobile virtual
network operator (MVNO) route should also be considered as a potential entry
strategy," he concluded.
CyriacusNnaji/GEE
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