Africa mobile firms ripe for mergers and acquisitions - analysts

Telecommunication service providers in Africa are due for a season of mergers and acquisitions, signalling a new era for the lucrative industry.

According to industry analysts, a surge in mergers and acquisitions and investment is predicted in Africa’s mobile and broadband industry, as service providers seek to scale up their businesses across the region.

“Demand is not in doubt, and neither is exponential growth in that demand,” explained  Hardiman Telecommunications Managing Partner Enda Hardiman. “This is reflected by telecommunications operators seeking economies of scale and it holds across the mobile sector, the towers sector and the broadband connectivity sector,” he said.

UK-based Vodacom group yesterday announced that it has agreed to transfer a 35 per cent indirect stake it holds in Safaricom to its sub-Saharan subsidiary. The deal, subject to regulatory approvals in both countries, will see Vodafone’s ownership in Vodacom increase from 65 per cent to 70 per cent, with the Kenya Treasury maintaining its 30 per cent stake.

This latest deal has been cited as an example of how African mobile telecom operators, infrastructure owners and service providers are said to be ramping up investment and targeting acquisitions across the region. “In mobile, transnational groups are consolidating operations,” explained Hardiman.

“This holds across countries and regions and also holds in the case of potential acquisition of single-play LTE operators,” he says.

Hardiman noted that service providers are increasingly turning to new revenue streams to hedge dwindling revenue from voice and SMS with many firms looking at social media, entertainment and finance as alternative growth areas.