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Why TMT investors are targeting fibre in Africa

Fibre in Africa has overtaken mobile infrastructure to become the investment obsession of all the major players in TMT, according to leading telecom and tech bankers and investors.

LONDON - Sept. 14, 2018 - TelAve -- Whether it is telecom operators such as Orange, Vodafone/Vodacom and MTN, infrastructure players, or FAANGS such as Google and Facebook, rolling out the precious fixed line cable has become everyone's priority. All the above are now engaged in a land grab, especially in the Sub-Saharan region, where Governments and DFIs (Development Finance Institutions) are working together to build the backbones that will help shape a better-connected Africa.

Which companies are leading investment?

A number of new Public Private Partnership (PPP) tenders are encouraging telcos, especially Orange, Vodacom and MTN, to invest money into new rollout projects to offer faster broadband to a growing middle class, while ramping up B2B presence.

Also competing in the space are Google and Facebook. Google formed a four-way partnership to invest in cities across African cities last year. CSquared's network is currently active in Uganda and Ghana, with more countries planed and US$100m worth of "cumulative capital commitments" in place to support the expansion. The project was responding to Facebook's plans to lay nearly 500 miles of fibre cable in Uganda. The company was partnering with Airtel and BCS.

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Many of the leading telecom, media and tech CEOs and Investors are meeting in London at TMT Finance Africa 2019 (http://www.tmtfinance.com/africa) to assess the best opportunities for investment on September 19.

Nick Rudnick, CEO  of leading African broadband operator Liquid Telecom, said: "Fibre networks are the future of internet access in Africa, offering consumers, businesses and government bodies a platform to grow and innovate," said Rudnick who will be speaking on the Broadband Leadership Panel. "Broadband continues to help public and private sector enterprises drive efficiencies – supporting the creation of jobs, improving access to online educational resources and increasing the adoption of emerging technologies."

Rudnick will be joined on the Broadband Leadership Panel by: Thomas Hintze, CEO, Wananchi Group; Suveer Ramdhani, Chief Development Officer, SEACOM; Anikó Szigetvári, Global Head - TMT Group, IFC; and Kobus Viljoen, CFO, Vumatel.

Subsea cable investment also accelerates

Subsea cable investment continues to be popular. Recently announced projects include: the Pakistan East Africa Cable Express (PEACE) cable network, which will link Pakistan with East Africa; the IOX cable which will connect South Africa with India via Mauritius, Rodrigues, and Reunion; the Australia West Express (AWE) cable which will link Djibouti with Australia; and, the FLY-LION3 cable, announced by Orange which will connect Mayotte with Grand Comore. The capacity of international submarine landing points is also being extended inland, with major initiatives under way, following African trade routes.

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Partnerships are also proving popular and, according to ITU News Magazine, African telcos could benefit from up to 30% in cost savings, and 60% capex reduction by pooling resources.

Major financial backers of new network rollout includes the World Bank, the African Development Bank and investment from China, either direct from the government or via one of the Chinese telecom vendors. Government owned electricity and railway network firms have also been a great source of deployment, such as the current SNEL project in DRC.

Is fibre investment leapfrogging mobile?

Previously, investors were vehemently backing mobile networks for Africa , however it is now widely accepted that next-generation fibre access in terms of speed and reliability, and expect fixed IP-based traffic to grow faster than mobile IP-based traffic driven by video content and cloud computing.

Africa still has such low bandwidth penetration levels. With 29% Internet penetration, the continent has the lowest internet rate in the world, compared to other continents: Western Europe (84%), Middle East (60%) and North America (88%).

However, despite geopolitical issues, reliable fibre routes are rolling out. After announcing an MoU with Telecom Egypt, pan-African telecoms group Liquid Telecom will be able to complete Africa's first terrestrial fibre network stretching 60,000 km from Cape Town to Cairo.
TMT Finance Africa 2019 (http://www.tmtfinance.com/africa) takes place in London on September 19, produced by TMT Finance (http://www.tmtfinance.com/).

Source: TMT Finance

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