During the past quarter, the African wholesale space has witnessed Liquid Telecom’s Cape to Cairo agreement, MainOne’s deal with Orange and the commercial launch of Angola Cables’ SACS. On the surface, these developments have little to do with one another. Taken together, we say they mean three things: bandwidth gluts don’t matter anymore, the African opportunity is about more than Africa, and OTT demand will determine (almost) everything.
As African mobile network operators (MNOs) continue to grapple with transforming their operating models, one option is getting stronger consideration: selling off the fibre infrastructure assets. In theory, this would help MNOs do three things: generate immediate cash, unlock under-exploited value in their metro and interurban fibre assets, and help reduce their long-term CapEx requirements, thus improving their business models.
The weight of governments in the African terrestrial fibre business is increasing. African government have committed around $1.7bn to building fibre backbone networks since 2010, according to data from our new terrestrial fibre report. In many markets, the government is the largest holder of terrestrial fibre capacity, a trend that carries significant implications as Africa seeks to enter the 4G and 5G eras. Is this a sustainable solution to reducing Africa’s growing urban/rural broadband divide? It’s complicated.