Access Kenya gets acquired by Dimension Data while Kenya Data Network ends their losing streak with deep pockets from Liquid Telcom; an excellent exit for the Somen’s and KDN shareholders right? Yes, but to the keen eye the story goes deeper when your pulse is on the future of tech and service delivery in the African continent often referred to as the next frontier for any high growth business.
In 2010 the Japanese giant NTT – Nippon Telegraph and Telephone Corp bought South African IT firm Dimension Data for $3.2 billion looking to consolidate its emerging market footprint. Could Dimension Data with its reported operating revenues in 2012 of US$ 5.84 billion act as a conduit for NTT DoCoMo a subsidiary of NTT Holdings to market entry on the mobile segment having had vast experience on the mobile data service front with the Japanese consumer having latched onto technologies synonymous with mobile data much earlier than the rest of the world?
Liquid Telecom who have built Africa’s largest single fibre network bought 80% into KDN having off-loaded 60% from South Africa based Altech and 20% from Naushad Merali. Liquid Telecom form part of the Econet Wireless diversified portfolio under the watch of one Strive Masiyiwa, who made a successful bid for a local telco license in 2004 whose setup later fell through.
Safaricom with Ksh.10 billion earmarked and already in use in the extended rollout of their own fibre network over the next few years have the opportunity clearly in their radar. Jamii on the other hand have increased their rural Kenya deployment though some sections of their Nairobi based rollout have been bogged down by a court case. I find their diversified strategy at group level that has them invested in real estate in the rift peculiar, it could be argued to be either distracting or a fallback plan with Safaricom, who pumped in quite a sum into them busy on their own infrastructure. These two must be careful not to roll out dump fibre, as consumers, with time will demand to pay less for the pipe but will pay more for what flows through it, a thing Wananchi Group of Zuku fame are capitalizing on – make zero margin on the pipe and leverage the content. This has seen them invest heavily in growing their content portfolio to appeal to a wider audience base with the lock out on EPL content still standing.
The biggest bottleneck in the coming to market of innovative services and technology has been and still is the local banking sector. Their low appetite for what I would consider measured risk, as guided by a well-defended excel sheet still makes it difficult to use them to structure and finance the multi-million dollar deals that will power, and profitably so the coming wave of innovative services riding on quality infrastructure.
As the long game by these well-funded outfits becomes apparent, we will see local banks angling for a piece, with the very real possibility of missing the bus and having to sit out the coming wave. The next 24 months for me heralds the birth of entrepreneurs who will make bank – dollar millionaire and possibly billionaire status, leveraging the coming infrastructure and market creation boom that will follow the expected heavy investments in the connectivity and content space.