Global Telcos May Dump Africa over Profit Threat

Africa may well be the next frontier for growth and expansion for global telecom operators, but a number of major players have encountered serious challenges around the profitability of their investments in trying to establish a sustainable and economically viable footprint on the continent.

And, according to global technology research and consulting firm, International Data Corporation (IDC), these challenges have led some global telcos to reconsider their plans for the region.

Etisalat Group, for example, entered into an agreement in 2014 that saw Maroc Telecom acquire its subsidiaries operating under the Moov brand in Francophone West Africa (i.e., Benin, Central African Republic, Gabon, Ivory Coast, Niger, and Togo).

The deal also included Prestige Telecom, a company based in the Ivory Coast that provided IT services to Etisalat’s operations in the six aforementioned countries. The move was spurred by the steadily declining revenues that Etisalat was pulling in from its international subsidiaries, with all of its West African operations (including Nigeria) contributing just 7% to its overall revenues in 2014.

Elsewhere, Bharti Airtel entered 15 African markets in 2010 after acquiring Zain’s subsidiaries on the continent, and has since expanded into two more markets.

However, after five years of operations, the telco is considering selling some of its African subsidiaries, largely due to concerns around sustainability and profitability. Indeed, Orange is currently in talks with Bharti Airtel to acquire four subsidiaries in Francophone and Anglophone Africa (i.e., Burkina Faso, Chad, Congo Brazzaville, and Sierra Leone).

“The poor level of infrastructure – particularly in relation to electricity supply – is one of the key challenges that telcos encounter when it comes to deploying and maintaining top-quality network operations in Africa,” says Paul Black, director of IDC’s telecoms program for the Middle East, Africa, and Turkey.

“This issue has consistently affected the profitability of telcos due to the increased levels of capital and operational expenditure they must undertake in building and maintaining a passive telecom infrastructure. Some global telcos have also failed to adapt and implement strategies that have succeeded in other regions.

Indeed, the majority of global telcos have been unable to localize their global strategies to suit the unique operating environments of the African market.”

“The operational challenges facing telcos in Africa have driven growth in the continent’s third-party telecommunications infrastructure management business, and IDC expects the pressing need for telcos to reduce their costs and increase their levels of control to sustain growth in this space,” continues Black.

“In order to increase the likelihood of success, telcos wishing to pursue growth and expansion in the African market must focus on developing enterprise products and services that appeal directly to the wants and needs of the local market, and to small and medium-sized businesses in particular.

Telcos looking to enter Africa should tailor strategies that have succeeded in other regions to the specific operating environments they encounter in Africa, while the mobile virtual network operator (MVNO) route should also be considered as a potential entry strategy.”

spot_img
spot_img
spot_img
spot_img
spot_img

Hot this week

NPW: Future of Retirement Security Depends on Early Planning-PenCom DG

Ms. Omolola Oloworaran, Director-General, National Pension Commission (PenCom) says...

Stanbic IBTC Pension Managers Supports PenCom’s Inaugural National Pension Week 2026

Stanbic IBTC Pension Managers, a subsidiary of Stanbic IBTC...

RMB Strengthens China–Africa Corridor with Opening of Beijing Advisory Business

  Building a bridge for China-Africa, connecting Chinese capital,...

Ecobank Advances Youth Innovation as Top 20 InnovateX Finalists Emerge for N20m Prize Pool

Ecobank Nigeria has announced the Top 20 finalists for...

Ecobank Advances Youth Innovation as Top 20 InnovateX Finalists Emerge for N20m Prize Pool

Ecobank Nigeria has announced the Top 20 finalists for...

Topics

Unity Bank Introduces USSD in Nigerian Languages

Unity Bank Plc has launched an Unstructured Supplementary Service...

Shell, 8 Banks Sign $2.2bn Contractor Financing Deal

Shell Companies in Nigeria, supported by the Nigerian National Petroleum Corporation (NNPC) has signed Memoranda of Understanding (MoUs) with eight Nigerian banks under the refreshed Shell Contractors’ Support Fund, the latest milestone in efforts to improve access to finance for Nigerian vendors and suppliers in the oil and gas industry.

ATCON: ‘0.2% Communications Tax Better than 9%’

The Association of Telecommunications Companies of Nigeria (ATCON) has...

‘INSURANCE FIRST Model Will Deliver 5-Point Agenda’

Mr. Tope Smart, the new chairman, Nigerian Insurers Association...

African Economic Conference 2016 for Dec. 5 in Abuja

The 11th African Economic Conference (AEC) will take place...

NGX Group Chair, Umaru Kwairanga, Leads Industry Delegation to South Korea

Dr. Umaru Kwairanga, Group Chairman, Nigerian Exchange Group (NGX)...

Unity Bank’s Yanga Account for Women Garners 97, 000 Customers in a Year

Yanga, a retail account designed exclusively (Only) for women...

Insurance, Banking, Telecom CEOs with Highest Media Visibility in Q2, 2024

Inspite of the challenging economic conditions and their adverse...
spot_img

Related Articles

Popular Categories

spot_imgspot_img