Out-Law / Your Daily Need-To-Know

Out-Law News 2 min. read

Investors back move for wireless broadband expansion in Africa


Mobile network operator the Afrimax Group said it has secured $120 million of growth funding from a consortium of international investors to speed up the building of high-speed wireless broadband technology “across multiple African markets”.

Afrimax, which was launched in The Netherlands in 2010, said the consortium backing its Long Term Evolution (LTE) business model is led by Tokyo-based trading, investment and services firm Mitsui & Co Ltd “together with a number of private investors spearheaded by Torreal, one of the largest private investment firms in Spain”.

In addition, existing Afrimax shareholders involved in the consortium include Four G Capital, the World Bank Group’s International Finance Corporation (IFC) and the IFC African, Latin American and Caribbean Fund, which is an investment fund managed by the IFC Asset Management Company. 

The chief operating officer of Mitsui & Co’s IT and communication business unit Nobuaki Kitamori said: “We are excited by the growth opportunities in sub-Saharan Africa, where Afrimax has secured one of the industry's largest footprints of 4G licences.”

Kitamori said the consortium planned to “rapidly replicate” the launch last February of Vodafone Uganda, which followed the signing of a “non-equity strategic framework agreement” by Afrimax and the Vodafone Group in November 2014.

Under the framework agreement, Vodafone Uganda was launched in February 2015 “combining the deployment of new high speed 4G networks with the use of existing infrastructure for 2G and 3G services”.

Vodafone also has a partner market agreement in Uganda with Afrimax under which the companies offer customers voice and data products and services using the ‘Vodafone Uganda’ brand. Vodafone said its multinational corporate customers also benefit from the addition of Uganda to their existing contracts for international managed services.

“There is clearly a need to invest further in broadband in Africa as governments cannot afford not to address this issue," said telecoms expert Diane Mullenex of Pinsent Masons, the law firm behind Out-Law.com. "Nevertheless, the financing of those infrastructures will require more sophisticated financing and from different industry stakeholders and financiers."

"The Telecom operators are now shifting their operating models and are unwilling to pay expensive licences without the appropriate regulatory environment that supports competition and lower prices," said Mulenex. "It remains to be seen how governments will promote direct and indirect investments in the underlying core networks, including in unserved areas.”

The African Union has said (104-page / 1.53 MB PDF) access to advanced information and communications technology (ICT) is “critical to the long-term economic and social development” of the continent.

“It has increasingly become essential that appropriate ICT infrastructure, applications and skills are in place and accessible to the population to close the development gap between Africa and the rest of the world,” the plan said.

In May 2014, the IFC announced a $2m advisory services agreement with Tigo Ghana to develop and expand mobile financial services in Ghana. The project is part of the Partnership for Financial Inclusion, a joint $37.4m initiative of IFC and The MasterCard Foundation to expand microfinance and extend mobile financial services in sub-Saharan Africa.

According to a survey published in June 2014 by Telecoms supplier Ericsson (8-page / 224 KB PDF), total mobile subscriptions in sub-Saharan Africa stood at about 70% at the end of 2013, compared to about 92% globally, and digital technology is “fast becoming a part of everyday life” in the region.

Africa’s mobile data traffic is predicted to grow around 20-fold between the end of 2013 and the end of 2019, the survey said.

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.