x
Wholesale/transport services

Liquid Telecom Plots West African Expansion

Africa's Liquid Telecom is assessing takeover opportunities that would help it to expand its fiber networks into West African markets outside its existing footprint, Light Reading has learned.

The telco owns and operates fiber networks in East Africa that stretch from Kenya to South Africa, but it is eager to develop a pan-Africa capability in the wholesale and enterprise sectors.

"West Africa is a natural place for us to look because we've done well in the east and the south," says David Eurin, Liquid's chief strategy officer. "We've got a presence in the Democratic Republic of Congo and we are planning to build much more there -- once we've done that you'll see us much more active in the west."

Go West
David Eurin, Liquid Telecom's chief strategy officer, at the company's central London offices.
David Eurin, Liquid Telecom's chief strategy officer, at the company's central London offices.

Eurin tells Light Reading that Liquid Telecom has the funding to buy players, but is faced with a paucity of options in West African markets. "There is not much to look at," he says. "I think it would work well to consolidate to create something that looks like a pan-Africa network, but we are still looking."

While Liquid has become the dominant fiber player in the east of Africa, no such regional force has emerged in the western half of the continent, according to Eurin.

Instead, the region's mobile network operators have been deploying their own small fiber rings for connecting base stations, giving Liquid little to choose from in terms of a major fiber deal.

West Africa's mobile operators have also shown a reluctance to part with their fiber assets. But Eurin thinks the situation could change in the next five years, drawing a parallel with the "towerco" model that has seen operators sell off their tower assets and focus on their core services operation.

"In the next five years it's a good bet to say the towerco model will be completely applicable to the fiberco model," he predicts. "There will be action on that side and we're looking at that."


For more fixed broadband market coverage and insights, check out our dedicated Broadband content channel here on Light Reading.


Guy Zibi, chief analyst at Xalam Analytics, Heavy Reading 's Africa and Middle East research unit, agrees that fiber takeover opportunities in West Africa appear limited.

One of the few "big" options available to Liquid could be an acquisition of MainOne, says Zibi, which owns fiber infrastructure in several West African countries, including Nigeria and Ghana. But the Xalam analyst points out that MainOne "is still weak on domestic and metro fiber," an area of growing importance to Liquid's strategy.

Much likelier would be a fiber sale by an operator such as MTN Group Ltd. , says Zibi, in line with Eurin's thinking on the evolution of the fiberco model.

"The mobile guys have a lot of fiber and are not exploiting it well," says Zibi. "The big obstacle to this is operator mindset -- it's been hard for African mobile operators to give up on those infrastructure assets, but they're definitely evolving."

"They let go of the towers, so they can probably let go of the fiber too," he adds. "The five-year timeline sounds about right."

Liquid has formed partnerships with mobile operators in markets where it lacks a network presence, but Eurin says these arrangements are far from ideal. "The vendor management part is much more complicated," he says.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

thebulk 1/26/2016 | 12:31:51 AM
The economics I wonder what the ROI is on deals like this for Liquid, I am fairly familar with the region and I have to think that ROI would be well over 5 years, approaching 10. Not to mention all the regional instability.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE