Africa’s fixed and mobile markets remain relatively unsaturated with some markets still generally underdeveloped, i.e. many still have yet to reach 100% penetration – average mobile penetration across selected African markets* is 83%.
Between 2015 and early 2016, active and highly dynamic mobile markets have been M&A hotbeds such as Tanzania (home to 36.8m mobile subscribers) where about 5 players are clamouring for a piece of the market pie.
Tough competition already pushed 2 groups to exit the market – Bharti Airtel sold back its Tanzania Telecommunication shares to the Tanzanian government while Etisalat sold its Zanzibar Telecom shares to another foreign conglomerate, Millicom (owner of Tigo subsidiaries across Latin America).
Apart of competition, LTE expansions have also ignited acquisitions in Nigeria where MTN – a pan-African player – bought Visafone as a strategic move to also gain the latter’s spectrum license to be used for LTE.
South Africa, also characterised as having a dynamic telecom market, saw mobile players targeting fixed line players in a bid to become a more converged player – e.g. Vodacom trying to buy Neotel (fixed line player) and MTN’s acquisition of FTTx player, Smart Village.
We expect that in a few markets, spectrum license auctions will pave the way for new entrants. In Nigeria, for instance, the regulator resumed auction of 2.6 GHz license after several postponements in the past years.
Finally, we also expect that M&A will continue to persist in overcrowded mobile markets are competing for a piece of the market pie, e.g. Ghana and Benin.