Logging on to Africa

As with any first mover, the adopter tends to burn their fingers, but in the case of Africa, the lessons learnt seem to have been good ones. Now our local ICT companies are looking carefully, going in slowly and taking control, but with local partners.

Their progress looks promising, particularly against the backdrop of the various crises going on in global financial markets.

Africa seems like even more of a logical place to invest. We generally understand the risks inherent in emerging markets and know how to do business in such environments, as is evidenced by MTN's success not only in Africa, but in a market like Iran.

And while some African companies may have initially viewed South African firms with suspicion - as so-called reverse colonisers - there now seems to be a greater spirit of partnership, with African companies seemingly keen to welcome South African skills, insights and access to capital.

This week alone, there have been a number of developments regarding SA ICT companies in Africa.

Dimension Data (Didata) announced it had made an acquisition in Angola, MTN said its Cote d'Ivoire subsidiary had bought that country's biggest landline operator as well as a leading internet service provider, and Altech reported on significant progress in its East African broadband operations.

Behind the scenes, the possibility that the Mowana consortium could spearhead the creation of another Pan African cellphone operator out of Telkom's stake in Vodacom and Globacom Nigeria continues to bubble on.

And, we can't forget Vodacom's recent purchase of African satellite connectivity provider Gateway Communications, which marked a significant move up the continent for it.

Spearheading African expansion

Other recent ICT groups that continue to make gradual progress up the continent include EOH (it has started a franchise model up Africa and is tendering for some big projects, although Africa is not yet a material contributor), Digicore (has offices in Nigeria and Kenya and sells to numerous African countries) and Simeka (Premium Ideas gave it an established presence in Nigeria, also has a presence in 22 African countries).

But, coming back to Didata's most recent deal. Although not material to the group, the Angola acquisition is interesting and represents a future growth source. It bought a 51% stake in 12-year old Angolan IT solutions company Sistemas Redes e Communicas (SRC).

That adds Luanda to Didata's growing presence on the continent, which already includes Kenya, Nigeria, Botswana, Algeria, Namibia, Tanzania and Uganda. Aside from SRC, other African acquisitions have included 51% of IT services provider ICL East Africa in April 2006 (operations in Kenya, Tanzania and Uganda), and Accelon, a communications services company in November 2007.

Subsidiaries Plessey and Internet Solutions are both players on the continent, and Didata is also Cisco's WiMax business partner in Africa.

Although he can't take all the credit, Didata's SA chairperson Andile Ngcaba has helped significantly in spearheading its African expansion.

Altech's foray into East Africa is also worth touching on.

Earlier this year, it concluded the acquisition of 51% of the Sameer ICT Group (which included Kenya Data Networks, Swift Global and Infocom; the digital network subsidiaries), giving it a firm presence in Kenya and licences in Uganda and Tanzania.

Restrictive regulations

It provides backhaul capacity to Celtel and Safaricom in Kenya, and is rolling out more fibre. Altech CEO Craig Venter has a vision of connecting up the landlocked countries in the region, and being able to provide international connectivity via the TEAMS undersea cable, which it has a 10% stake in.

In Rwanda, it is rolling out a WiMax network and, after being forced to dismantle its SA test WiMax network, redeployed the skills to East Africa.

This seems a pity, but speaks to the restrictive regulatory framework in South Africa and the scarcity of spectrum.

So, although it is still early days for Altech in the region, things do look promising. It also seems to have learnt from past mistakes.

A previous foray as an operator into Africa was in a joint venture with Strive Masiyiwa's Econet Wireless Group. The JV was, however, quickly dismantled and the stake sold back to Econet in 2005. Two strong personalities in joint control were clearly not a good recipe and the relationship was fraught with difficult from early on.

Since then, the telecoms market has moved on, to a more converged network environment, making the data and connectivity space perhaps more attractive than pure voice. So, in hindsight, it's maybe not a bad thing this didn't work out.

- Fin24.com