A fresh wave of merger and acquisition (M&A) deals are expected to take place across Africa in 2015 due to slowing growth and increasing investment demands on telecommunications companies, industry analysts have said.
Panellists at the Telecommunications Media and Technology (TMT) M&A Forum 2015, including industry heads, private equity investors and senior bankers and advisers predicted an increasing number of consolidation deals in Africa in particular, as part of a global surge of M&A activities driven by convergence and consolidation.
One source pointed out that there was still a considerable amount of emerging markets repair to be done in the TMT sector in Africa, which would help bring these deals to fruition. A senior industry speaker said: “We have moved from high growth to slow growth in the more mature markets which will help drive consolidation over the next 12 months.
“Consolidation has taken longer than expected to happen, but with significant 3G and 4G investment needs coming up, it will be game over for some of the weaker players. Regulators are also generally pro-consolidation to ensure service levels and investment spend remain high.”
One source said that they also expected one ‘transformational’ deal in Africa over the next 12 months, with one leading pan-African operator said to be planning to acquire a rival group, with discussions ongoing. In Nigeria, talks are underway among some key players in the Nigerian telecoms market that may result in another major deal before mid-2015, according to Technology Times.
As it stands, a Nigerian CDMA network may become the latest beneficiary of an acquisition by one of the big four GSM networks in the country, a source conversant with the situation told Technology Times on condition of anonymity.
A deal is within radar and the parties are likely to announce a deal latest by mid-year as the telecoms market enters a crucial stage of growth as telcos hone strategies to meet the needs of an increasingly data-hungry customers, after rising the famous crest of the mobile telephony explosion of their first decade.
Meanwhile, investment in fibre networks in metropolitan areas within countries such as Nigeria was also noted as an increasingly important trend, with the requirement to build out fibre backbones attracting new investors, sources added.
One speaker at the forum said: “You are seeing fibre rollout in surprising markets in high density areas, which is a big pattern in large markets and a wider theme for emerging markets. For example, the last mile network serving the corporate sector in Nigeria – by building fibre rings in big cities – is attracting a lot of interest from investors.”
Ben Uzor
