Africa’s telecoms sector will undergo more M&A activity as its markets continue to consolidate as they mature, Moody’s Investors Service says in a report published today.
Moody’s expects more consolidation within markets as existing operators – particularly smaller third or fourth tier companies – look for ways to cut costs and expand their market share. The African telecoms market is comprised of a mix of local, regional and international operators, some of whom have developed competitive regional footprints.
Those African countries with four or more operators or with telecom companies that have a market share of less than 15% are likely to see more consolidation. The average number of operators in each African country is three, with some countries, such as Uganda, Côte d’Ivoire and Tanzania, with six operators.
« Not all countries are able to support a large number of operators, and smaller wireless operators are finding it increasingly difficult to compete and increase their market share profitably, » says Dion Bate, Vice President — Senior Analyst and a co-author of the report.
« Companies considering potential mergers or acquisitions will be hoping for cost savings through improved economies of scale and the opportunity to apply uniform and improved branding, service and product offerings. »
Some operators will need funding to pursue M&A opportunities. With many of the larger international operators already facing revenue pressures and capital expenditure demands in their core domestic markets and thus less likely to pursue M&A opportunities in Africa, we may see some revisiting their African footprints as others seek to strengthen their regional positions.
This refocusing on domestic markets may also result in some European operators leaving African markets where they have smaller shares, the report says.
Some smaller regional players may face weaker access to capital as a result of concentrated exposures to mostly sub investment-grade countries in south, east and west Africa where capital markets are less developed.
Cross-market consolidation will be less challenging for the larger regional operators to pursue where greater geographic diversification and sizable market shares can be achieved, the report adds.
From a regulatory standpoint, operators with the third or fourth largest market share are more likely to be subject to M&A activity to which regulators are less likely to object where it results in economies of scale and increased profitability while not being a detriment to the competitive environment. We expect regulators to also favour transactions that support market stability and further capital investment and the expansion of service offerings. In-market M&A consolidation transactions which result in the largest operators further strengthening their market positions are more likely to face regulatory scrutiny.
Africa’s telecoms regulators are expected to increasingly promote market competition and improved network quality, in line with a trend seen in more developed markets.
Operators will also try to contain cost pressures through strategies such as network sharing, tower sales and outsourcing to specialised third parties.
Article sélectionné par GE.THORIN/LillyBelle