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Africa’s Tech and telecom sector to thrive in 2018 and 2019 – experts

Africa’s Tech and telecom sector to thrive in 2018 and 2019 – experts

M&A activity in the technology and telecommunication sectors in Africa and the Middle East will more than quadruple in 2018, from 2017.

This is according to Baker McKenzie’s Global Transaction Forecast, developed in association with Oxford Economics. The report shows that M&A in the tech and telecoms sector in Africa and the Middle East was valued at US$1 .2 billion in 2017. This is predicted to increase to US$5.9 billion in 2018 and a further US$5.9 billion in 2019, before decreasing to US$3.9 billion in 2020.

The report notes that a more positive global economic outlook, the expansion of technology across industries, investment from emerging markets, and strong corporate balance sheets are the key factors in driving investment in tech M&A around the world, including in Africa.

Darryl Bernstein, Head of the Technology, Media and Telecommunications (TMT) Practice at Baker McKenzie in Johannesburg, South Africa, explains the predicted rise in tech and telecoms M&A in Africa.

“Africa’s growing telecoms infrastructure and access to online services and platforms continue to improve access to the online economy. Increased local demand for innovative products, services and solutions drives offshore telecommunications and technology companies to target opportunities in Africa. The growing financial services sector has also seen domestic banks make significant investments in technology to advance their innovation agenda. African tech companies are also targeting offshore investments in companies that will deepen their access to new technologies, markets and talent,” he said

“The expansion of emerging technologies across industries, including agribusiness, automotive and of course fintech, will also drive M&A activity as we expect to see more cross-sector deals involving technology,” added Bernstein.

Globally, deal activity in the technology and telecommunications sector is also likely to accelerate. In 2018, M&A activity in the tech and telecom sector is forecast to rise significantly across all regions. North America will top the list with transactions totalling US$243 billion, followed by Asia Pacific with US$108.3 billion, Europe with US$106 billion and Latin America with US$4.9 billion.

“The rapid growth of innovation in artificial intelligence, cloud computing, cybersecurity, and big data is driving anticipated deal activity,” said Matthew Gemello, an M&A partner at Baker McKenzie based in Palo Alto.

“Hybrid sectors represent the growing convergence of traditional industries and technology as companies battle to remain competitive,” said Anne-Marie Allgrove, global chair of Baker McKenzie’s Global TMT Industry Group based in Sydney.

“When you couple the rapid pace of innovation and continued push for vertical integration, it creates a recipe for increased M&A activity,” she added.

One of the clearest market dynamics driving transactions is that businesses focused on the use of customer data need to increase the scope of their customer reach and are seeking to achieve this by buying competitors and new technologies that will attract more customer engagement.

“Top talent continues to be an important driver in technology acquisitions,” Gemello said. “We are seeing fewer pure ‘acqui-hires’ as compared to prior periods in the last 10 years, but the overarching need remains paramount from a competitive perspective.”


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Following reverse listing, public can now acquire shareholding in Paratus Namibia

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20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.