Africa nears saturation point for mobile players

23.04.2010

"These are typical problems when you operate in emerging markets like Africa where minority shareholders often do not have the financial muscle and balance sheets to access debt finance on their own and fund their part of the investment to deploy networks," Valoyi said.

The issue of shareholding is further complicated by the fact that many investors coming into Africa are forced to partner with strategic minority shareholders who are often key in ensuring that licenses and permits are issued. In some cases government policy requires foreign investors to partner with locals. In other cases licenses are issued to locals only, even though the practice is not official government policy.

"In most such cases the problems are based in lack of clear communication upfront between the respective parties or lack of proper due diligence or putting relevant clauses into the agreements; if more upfront work is done (particularly by the investing party) most of these problems can probably be avoided," said Dobek Pater,senior telecom analyst at Africa Analysis.

National regulation authorities have accelerated legislation and have imposed stiffer penalties for poor network quality, stopped providers from adding more subscribers unless they upgrade networks and in some cases, as in an incident in Niger, licenses have taken away.

"The National Regulatory Authorities have been addressing issues such as network quality with the objective of improving the quality of services delivered and lowering the cost of mobile communications; often, license conditions have Service Level Agreements included which forces operators to deploy networks and offer services in under-served areas; therefore, where fixed line telcos have often failed to deliver services, mobile operators have brought communications to communities," Pater said.

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