Updated: Aug 11, 2022
With a booming population of over one billion people, the African continent has been in recent years seen as an exceptional prospect to invest in the telecom sector, with trillions of dollars being received by many countries in funding to advance their telecommunications’ infrastructure[1]. African Telecom and technology companies are accomplishing new milestones, making the most of the renewed international investor interest to channel money towards the development of infrastructure, finance the roll-out of data centers, propel fiber connectivity to new areas, and deploy new mobile networks in key markets.[2] This has provided a boom in the sector throughout the continent, as well as bringing further investment in training and wider infrastructure projects.
Unlike in many other regions, Africa’s telecom sector still offers huge growth potential. It appears that Africa’s low penetration rates, which was once a weakness, is now a boon, both for investors searching for high-growth markets and a continent looking to increase its global connectivity.[3] Furthermore, Telecom operators in Africa are merging and the race to deliver latest broadband and wireless infrastructure is escalating, which is resulting in increased need for investment. This is evident by the massive investment deals that has seen telecom companies such as Rack center, Liquid intelligent technologies, Safaricom Consortium, Airtel Africa and Africell benefiting hundred of millions of US dollars in investment deals from international investors between 2020 and 2021.
Most of the international financing is being channeled towards building new mobile networks and rapid digitization of operations at most African data centers. For instance, Liquid closed a $620 million bond issue for its intended 100,000km pan-African network. According to the available report[4], this elevated funding of telecom and tech infrastructure has enabled the company to rapidly roll-out its network in quick time, with 10,000 km laid out in five months alone. Furthermore, Africa Data Centers, powered by a $300 million from the DFC is building and expanding existing data centers in Nigeria, South Africa, Kenya and Ghana among others.[5]
Africa Data Centers' recently acquired Samrand data center facility in Johannesburg, South Africa
Image Courtesy: Quartz Africa/Online
The global investments being witnessed within the continent's telecoms infrastructure has the potential to revolutionize the lives of millions of people in Africa, particularly those based in rural areas through enabling a digital economy as well as improving the range and affordability of services on offer. As incomes rise, so the demand for telecommunication services rises, but equally, as investment in infrastructure and technology builds scale, so the cost of rolling out these services to the public falls, creating a virtuous circle of growth and development[6]. Global Investments into Africa’s telecom sector also impacts unemployment rates, growth in GDP, as well as the different countries’ level of literacy, thus narrowing the gap between developed and developing economies.
[1] ‘Top Ten investments in African Telecommunications”, Balancing Act, 4 Nov 2021, https://www.balancingact-africa.com/news/telecoms-en/23077/top-ten-investments-in-african-telecommunications
[2] Tawanda Karombo , 'Africa’s telecom sector is seeing a boom in investment’, Tribune Wired, 5 Nov 2021, https://www.tribunewired.com/2021/06/11/africas-telecom-sector-is-seeing-a-boom-in-investment/
[3]Barbara Njau, ‘Investors come calling for Africa's telecoms market’, fDi Intelligence, 4 Nov 2021, https://www.fdiintelligence.com/article/41067
[4] Tawanda Karombo , 'Africa’s telecom sector is seeing a boom in investment’, Tribune Wired, 5 Nov 2021, https://www.tribunewired.com/2021/06/11/africas-telecom-sector-is-seeing-a-boom-in-investment/
[5] Tawanda Karombo, ‘The US development corp is betting $300 million on Africa’s rising demand for data storage’, Quartz Africa, 4 Nov 2021, https://qz.com/africa/1945156/us-dfc-bets-300m-on-africas-demand-for-data-storage-centers/
[6] Patrick Lawlor, ‘Telecoms in Africa – a catalyst for growth’, Investec, 5 November 2021, https://www.investec.com/en_za/focus/investing/telecoms-in-africa-catalyst-for-growth.html
