The three companies are the continent’s largest independent cross-country fiber plays. Together, they are largely responsible for upending African international capacity markets, driving sharp cuts in international wholesale prices by close to 80% over the past six years. This analysis examines where they go from here.
The top line traffic projections that underpinned the development of African fiber models have largely come to fruition. The number of Internet connections in the markets covered by the Big Three Fibercos has Risen 5x - 10x over the past five years. Data traffic is exploding, and more than 75% of fixed broadband connections will be fiber-based over the long term in many markets.
But the Fibercos are facing a number of fundamental challenges. Traffic growth is increasingly decoupled from wholesale capacity sales growth. African demand for leased international capacity is structurally unbalanced, the international fiber segment is oversupplied and fiber asset utilization rates are suboptimal. In effect, we believe the African international capacity business is now somewhere between a cash cow and a dog, wand the economic value has moved to metro and enterprise markets. The Big Three Fibercos have to adapt.
The report examines how the three companies are tackling this challenge, along with the strategic options available to each, based on international experience (from Level 3 and euNetworks), the dynamics of their core geographies and the state of their current network infrastructure and service portfolio.
The report also examines the consolidation potential of each of the Fibercos, either as acquirers or as acquisition targets. We argue that there is potentially more value in domestic fiber and enterprise market consolidation than in a combination of the Big Three Fibercos. We also note that each of the three companies would be a great fit for a number of players such as Etisalat or Vodacom Business.
1. The Africa FiberCo Big Three: An Overview
- Africa Big Three FiberCo - Geographic Reach
- The Africa Big Three FiberCo - Service Portfolio
2. The Africa FiberCo Big Three: Market Context & Business Challenge
- The Top Line Traffic Projections that Underpinned FiberCo Models Have Largely Come to Fruition
- Price Pressures Are Tightening the International Wholesale Capacity Sales Picture
- But African Demand for Leased International Capacity is Structurally Unbalanced…
- International Fiber Utilization Levels Are Relatively Suboptimal
- African Fiber Market Value Has Resolutely Shifted from International to Domestic Fiber Capabilities
- Fiber Infrastructure Provider Strategic Options
3. How Other FiberCos Did It: International Examples
- Level 3: Transformed Into an Enterprise-Focused Global Infrastructure Bandwidth Provider
- eU Networks: Focus on Best-In Class, End-to-End Infrastructure Bandwidth Provider
4. Reviewing Strategic Options for The Big Three FiberCos
- The Best Performing Communications Infrastructure Players Generally Have Regional or Global Scale
- What They Are Doing - Africa FiberCo Strategic & Tactical Steps
The MainOne Case: Overview
- The MainOne Case: Nigerian Home Market Has Strong Consolidation Potential
- The MainOne Strategic Case: (Mostly) Organic in the Metro+Enterprise, Buy the National Backhaul
The Seacom Case: Overview
- South Africa’s Communications Infrastructure Market: Thriving, with Room to Grow
- The Seacom Strategic Case: In Crowded SA Market, Acquisitions Trump Organic Growth
The Liquid Telecom Strategic Case: Excellent Position - but Can Liquid Really do Everything?
5. The Case For (and Against) a Big Three FiberCo Consolidation
- How the Big Three Map Out
- What a Consolidated Portfolio Would Look Like
6. Assessing Africa’s Big Three FiberCo as Acquisition Targets
- The Case For an African Acquisition - Truly “Global” Network Scale
- The Global Player Case Against an African Acquisition - In Truth, There Are No Great Fits
- The Pan-African Case for a FiberCo Acquisition - Vodacom, Etisalat, PCCW and IS
- Broadband Infraco
- Dark Fibre Africa
- Etisalat Wholesale
- HTN Nigeria
- Liquid Telecom
- MTN Business
- PCCW Global
- Phase III Nigeria
- Suburban Telecom
- Tata Communications
- Telkom SA
- Vodacom Business