Africa - need for a further boost

African telcos need fresh boost to extend growth -report

Africa's telecoms industry needs a fresh boost to continue its stellar growth that has attracted interest from buyers in Europe, the Middle East, India and China, a report prepared for a regional conference said.

African telecoms industry leaders gather in Cairo this week just as a possible tie-up between South Africa's MTN Group and Indian mobile firm Bharti Airtel puts the continent into the spotlight.

More than 5,000 visitors from 75 countries, including dozens of senior executives, regulators and politicians are expected in the Egyptian capital for the May 12-15 International Telecommunication Union's (ITU) Telecom Africa conference.

Just four years ago, an ITU report estimated that under the most optimistic scenario it would take until the year 2010 for mobile subscribers in Africa to exceed 200 million -- a number markets raced past already last year.

The contintent now counts more than 250 million mobile phone customers, but a report prepared for the 2008 conference said policy makers needed to remove obstacles to further growth.
"The present environment is unlikely to sustain and deepen ICT growth," the ITU report said.
It noted that most countries where mobile performance is poor relative to per-capita income have limited competition.

Eritrea and Ethiopia have the lowest mobile users relative to their population on the continent and only one carrier each, while Liberia -- emerging from civil war and with a lower per-capita income -- has four mobile operators and a penetration that is six times higher.

Governments must strengthen regulators, privatise dominant state-owned carriers and allow more competition and private sector investment, the ITU report said: "A second wave of regulatory reform could really unleash growth and investment in Africa."

AGGRESSIVE EXPANSION

From Britain's Vodafone Group to France Telecom, carriers from industrialised countries have bought into Africa's high-growth markets, but companies from other emerging markets have also been active.

Kuwait's Mobile Telecommunications Co (Zain) bought Celtel for $3.4 billion in 2005 to enter sub-Saharan markets and has been agressively expanding since then -- by 2011, it expects 70 percent of its revenue and profit to come from Africa.

Bharti and MTN said last week they were in talks which may or may not lead to a deal, and the Financial Times reported that Vodafone and India's Reliance Communications were also likely to be interested in MTN.

China Mobile Ltd, the world's biggest mobile carrier, has said it was eyeing the South African market but has not bid for MTN.

China and India, the world's two most populous nations, are battling for resources to drive their roaring economies, and are going head-to-head when it comes to cross-border acquisitions in fast growing companies.

Some financial analysts covering mature telecoms players, however, have questioned the value of deals in emerging markets, noting synergies have been hard to find, with the exception of bigger purchasing power with handset and infrastructure suppliers.
Internet access will be another area of focus.

Many in the industry believe that Africa should embrace mobile broadband -- delivering Internet access via third-generation mobile phone networks or other emerging technologies such as WiMax instead of fixed lines.