AlCazar Capital Partners - Africa Telecom Report

Feasibility Study: Private Equity
Investment Opportunities in the African

Telecom Sector
For
AlCazar Capital Partners, Dubai-UAE

By
Apurva Chiranewala
Manoj Balaji
Monita Anand
Sunitha Suresh
S.P. Jain Center of Management

18 Nov 2007
2|Page Special Group Project
CERTIFICATE
This is to certify that the project titled “Feasibility Study of private equity investments in
telecom sector in Africa” submitted in partial fulfilment of the requirement for the award of
degree Global Masters in Business Administration is a record of the candidate‟s own work
carried out by him/her under my/our supervision. The method embodied in the thesis is
original and has not been submitted for the award of any other degree.
Date: November 18, 2007

DECLARATION
This is to certify that the project titled “Feasibility Study of private equity investments in
telecom sector in Africa” submitted in partial fulfilment of the requirement for the award of
degree Global Masters in Business Administration is a record of the candidate‟s own work
carried out by him/her under my/our supervision. The method embodied in the thesis is
original and has not been submitted for the award of any other degree.
Date: November 18, 2007
APURVA CHIRANEWALA (GMBA07E087)
MANOJ BALAJI (GMBA07H125)
MONITA ANAND (GMBA07A117)
SUNITHA SURESH (GMBA07A141)

Acknowledgement
We would like to take this opportunity to thank AlCazar Capital Partners, Dubai for giving
us a chance to work on a project assessing the private equity investment opportunities in
Africa. Working on the project gave us insights into unexplored business opportunities and
potential sectors for investments.
We would like to thank our organization mentor Mr Dinesh Tiwari who actively guided us
through this project giving us valuable inputs and our college mentor Mr Sanjay Sircar, who
helped us with methods and models for analysis of data.
We thank Mr Ramkumar Kakani and Mr Naveen Bhatia for helping us with linking the
classroom concepts with the project and real time requirements.
We also thank Dr. Shilpa Dalvi for her guidance during every stage of the project and for her
efforts to maintain timely updates.
We would also like to acknowledge Mr Bocar, Vice President SAMENA Council, who gave
us considerable first hand information about telecom revolution in Africa.
We also express our sincere thanks to the respondents of our survey for taking out
time from their busy schedule without whose inputs the project would not have been a
success.
We extend our gratitude to the administrative staff and fellow students of S.P. Jain Center of
Management for their guidance through the course of our memorable journey.
Executive Summary
Africa has a total population of 900 million with a mobile penetration of 20%. Sub Sahara
Africa has a total population of 700 million with a mobile penetration of mere 12%. With
high population and low mobile penetration it is being considered a gold mine of
opportunities. Recently, the telecom sector has seen tremendous growth indicating investors
the plethora of underlying opportunities.
AlCazar Capital Partners is a private equity firm focused in investments in emerging

markets. With Africa‟s booming telecom and growth potential, the need to assess the market
opportunities is evident. This report focuses on the study and assessment of the investment
opportunities in African telecom sector and identification of attractive investment
opportunities. South Africa has been considered out of scope for the study.
The study was a step by step by process wherein firstly data collection was carried out
for each of these countries on various parameters such as economic indicators, political
indicators, infrastructure developments, population and demographics and telecom indicators
(penetration, revenues etc). The parameters were quantified and given weights based on the
primary findings of the research. Further, clusters were created for the regions on the basis of
common parameters so that the clusters can be studied individually. The individual clusters
were “North Africa” and “Sub Saharan Africa”. The clusters were then further studied where
each country was assessed using 3 different methods. Each of the methods had advantages
and disadvantages of its own. Method I assessed the countries by grouping them into “Good”,
“Bad” and “Average”. The groups were given a certain score and a final score for each of the
countries was calculated. Method II assessed the countries by calculating percentile for each
of them and a final score was arrived at for each of them. The 3rd method was the qualitative
analysis of the data collected through our primary research. The output of each of these
methods was combined and a final list of countries was arrived at. The list of countries were
North Africa – Algeria, Egypt, Morocco and Tunisia
Sub Sahara – Ghana, Mozambique, Kenya, Nigeria, Tanzania and Zambia
The analysis shows that investment in the cellular telephony is more profitable than the fixed
line telephony with the penetration levels growing by leaps and bounds. Countries that fell
short of few parameters in one of the models were Angola, DRC, Sudan and Senegal. These
countries are the possible future drivers in the telecom sector.
Future telecom growth trends in few countries selected were estimated on the basis of
a proxy country. The proxy country selected was Pakistan because of the similarities
portrayed by the telecom growth in the country with few regions in Africa.
The corollary of the study clearly outlines the underlying telecom opportunities in
African region. Africa is booming in telecom and it is an attractive investment option to
invest now.
TABLE OF CONTENTS
ACKNOWLEDGEMENT ....................................................................................................... 4
EXECUTIVE SUMMARY ..................................................................................................... 5
TABLE OF CONTENTS ........................................................................................................ 7
1.0 INTRODUCTION.............................................................................................................. 9
1.1 BACKGROUND OF THE RESEARCH/ STUDY ......................................................... 9
1.2 INFORMATION ABOUT THE ORGANIZATION: .................................................... 11
1.3 NEED FOR THE STUDY ............................................................................................. 11
1.4 OBJECTIVE................................................................................................................... 11
1.5 SCOPE OF THE PROJECT........................................................................................... 12
1.6 BRIEF METHODOLOGY ............................................................................................ 12
1.7 LIMITATIONS .............................................................................................................. 13
2.0 RESEARCH METHODOLOGY: ............................................................................. 14
2.1 RESEARCH OBJECTIVE ............................................................................................. 14
2.2 RESEARCH DESIGN ................................................................................................... 14
2.3 DATA COLLECTION ................................................................................................... 15
2.3.1 DATA COLLECTION SOURCES ......................................................................... 15
2.3.2DATA COLLECTION METHODS ......................................................................... 15
2.4 DATA ANALYSIS ........................................................................................................ 18
2.4.1DATA ANALYSIS TOOLS: ................................................................................... 20
2.5 QUALITATIVE METHOD I & II ................................................................................. 25
3.0 FINDING AND ANALYSIS ........................................................................................... 25
3.1 METHOD I .................................................................................................................... 26
3.2 METHOD 2 .................................................................................................................... 27
3.3 PRIMARY RESEARCH ................................................................................................ 30

3.4 FINAL LIST OF COUNTRIES ..................................................................................... 34
3.4.1 NORTH AFRICA .................................................................................................... 36
3.4.2 SUB SAHARAN AFRICA......................................................................................49
3.4.2.1 GOOD PROSPECTS.......................................................................................49
3.4.2.2 FUTURE POSSIBLE DRIVERS.....................................................................61

3.4.3 PROXY COUNTRY ANALYSIS .......................................................................... 62
3.4.3.1 PAKISTAN : BENCHMARK COUNTRY.....................................................63

3.4.3.2 CORRELATION ............................................................................................. 64
3.5 INVESTORS PERCEPTIONS ...................................................................................... 66
3.6 MERGERS AND ACQUISITIONS..............................................................................67

4.0 EMERGING TRENDS.................................................................................................... 68
5.0 CONCLUSION.................................................................................................................70
APPENDIX A:........................................................................................................................79
APPENDIX B:........................................................................................................................78
APPENDIX C:........................................................................................................................79
APPENDIX D:.......................................................................................................................82
APPENDIXE:.........................................................................................................................88
APPENDIX F:........................................................................................................................89
LIST OF TABLES/ LIST OF EXHIBITS ........................................................................... 90
GLOSSARY............................................................................................................................92
BIBLIOGRAPHY..................................................................................................................94
1.0 Introduction
1.1 Background of the research/ study

The telecommunication sector has been steadily growing in most African countries. The fixed
line telecommunication systems has developed at a slower pace whereas the development of
wireless and mobile communication technologies has been phenomenal. Africa currently has
over 900 million people and a mobile penetration of just about 20%. Mobile
telecommunication was introduced in some of the African countries in 1992, after an intial
steady growth period mobile communication growth exploded around 1999 and has been
growing since. Recent investments made in the telecommunications space has tremendously
contributed to the the growth in this sector.
Private Equity is defined as any equity investment in any financial asset that is not registered
for public trading. Private equity can be used for the following purpose:
– Expand operations through capital investment
– Develop new products and technologies
– Resolve ownership and management issues
Private Equity Business Model can be easily understood by the following diagram:
Figure 1
Private equity investors seek opportunities in companies with the following attributes:
– High minimum rates of return – 25% - 35%.

10 | P a g e Special Group Project
– Well-structured management.
– Consistent earnings.
– Excellent industry reputation.
– Ability to meet specified operational milestones.
Historically, the bulk of African private equity activity has been concentrated on a few
countries in Southern and Northern Africa, such as South Africa, Egypt and Morocco. The
lack of private equity investments in the region stems from a number of factors. Many of the
systems and institutions that typically facilitate the private equity investment process, from
deal flow to exit, are absent in the region. The small size and fragmentation of most West
African economies, their poorly developed financial markets, poor corporate governance
practices, and political instability are a few of the challenges an investor might face. In West
Africa in particular, nations such as Liberia, Ivory Coast, Togo and Sierra Leone have
experienced recent unrest which negatively impacted their economic growth. [1]
Most recently, following years of mismanagement by state-owned monopolies,

countries are increasingly adopting sector reform policies that are driving the demand for
investments in infrastructure related projects. The high returns in African equity markets over
the last five years continue to attract foreign investments in the region. And private equity
firms with regional familiarity can take advantage of the improved macroeconomic
environment in certain countries, and the prevalence of undervalued companies in the region.
These positive trends coupled with Africa‟s low correlation to world markets make
investment in the region an attractive portfolio diversification.
A final critical factor in the growth of private equity investment in the region is that
developed nations are becoming less attractive destinations for private equity. As the amount
of available capital in the US and Western Europe continues to grow, the competition for
good deals heightens, and fund managers are increasingly looking for alternative investment
destinations.
[1]
The climate for private sector development in Africa – International Finance Corporation
1.2 Information about the organization:

Al-Cazar Capital is a private equity firm headquartered in Dubai which is predominantly
focused on investments in emerging markets. Agility Logistics is the sponsor for their
investments. It is a $300 million fund managed by three partners, one of them being our
mentor Mr Dinesh Tiwari. AlCazar Capital Partners diversifies its risk by investing in various
projects across industries by limiting their investments within $10-20 million. With Africa
being an emerging economy, AlCazar Capital Partners is assessing the feasibility of
investment in the African Telecom sector.
1.3 Need for the study
Africa is the first continent in the world in which cellular telephony has outnumbered the
fixed line network. There has been rapid telecom development in certain parts of Africa in the
recent past. The government of the African countries have carried out significant economic
reforms and programmes to hasten the process of economic development of their respective
countries, which in turn fuels the telecom industry. Thus, such an emerging economy is
slowly becoming the focus of the investors. Investors perceive huge potential in this market
in terms of info-communication development. In order to achieve universal access, and full
inter-country connectivity the telecom sector requires huge investment. This symbiosis calls
for a detailed research to identify precisely where the immediate opportunities exist.
1.4 Objective
With rapid developments in the telecom sector, huge investments are flowing into the African
economy. AlCazar Capital Partners, a UAE based private equity firm, is interested in the
assessment of the telecom market in Africa. The feasibility of investments considering that
most of the countries in Africa had been marred by poor social and economical conditions in
the past becomes one of the vital factors for an investor.
AlCazar Capital Partners gave us the opportunity to assess the telecom opportunities in
African countries. The objective of the study is to analyze African countries based on various
parameters like key economic indicators, political indicators, telecom infrastructure, telecom
revenues and telecom penetration, investment viability and population and demography. The
outcome of the study should be the recommended list of countries for investments and the
timeline for investment.
1.5 Scope of the project

The following is the scope of the project:
a) Study and analysis of telecom opportunities in African countries.
b) The study would include the following:
i) Economic and Political Indicators
ii) Regulations and Liberalization
iii) Telecom Indicators
iv) Competitive Landscape
c) Collection of relevant data from primary sources e.g. interview, questionnaire etc. and
secondary sources e.g. electronic resources, reports and journals etc.
d) Recommend list of countries for investment.
e) Recommend telecom sector for investment.
f) Study of South Africa is out of scope.
1.6 Brief methodology

Firstly data collection was carried out for each of these countries on various parameters such
as economic indicators, political indicators, infrastructure developments, population and
demographics and telecom indicators (penetration, revenues etc). The parameter were
quantified and given weights based on the primary findings of the research. Further, clusters
were created for the regions on the basis of common parameters so that the clusters can be
studied individually. The individual clusters were “North Africa” and “Sub Saharan Africa”.
The clusters were then further studied where each country was assessed using 3 different
methods. Each of the methods had advantages and disadvantages of its own. Method I
assessed the countries by grouping them into “Good”, “Bad” and “Average”. The groups
were given a certain score and a final score for each of the countries was calculated. Method
II assessed the countries by calculating percentile for each of them and a final score was
calculated for each of them. The 3rd method was the qualitative analysis of the data collected
through our primary research. The output of each of these methods was combined and a final
list of countries was arrived at.
Figure 2
1.7 Limitations
 Lack of first hand accessibility to African market: Since it wasn‟t feasible to go to

Africa, we couldn‟t get first hand information from African telecom players and
investors.
 Data scarcity: Some of the data available from the secondary sources were obsolete.
Hence, it was difficult to assess the present trends of the telecom sector in Africa.
 Too many assumptions in the Mathematical Model: To assess the telecom
opportunities in terms of telecom growth, licensing costs, subscriber acquisition costs etc
with a quantitative model, data wasn‟t readily available which plugged in innumerable
assumptions into the model. As a result a concrete mathematical model couldn‟t be built
to substantiate the analysis.
 Limited target audience: Since the target audience was limited to investment banks,
telecom players and equity research houses who invest in the African telecom sector, it
was difficult for us to get in touch with all of them to gather information.
2.0 Research Methodology:
2.1 Research Objective

The objective of this Special Group Project is to identify those African countries which
would prove to be the most profitable for Private Equity Investments in the African telecom
sector. The objective of the research therefore is to collect the relevant data required for this
study, provide an appropriate method to aid in the analysis and arrive at a final conclusion.
2.2 Research Design

The design incorporates carrying out a descriptive study to assess the feasibility of investing
in these countries based on the following parameters:
 Key Economic Indicators

o GDP, real GDP growth rate & per capita GDP
o Population, Population growth rate & Demography
o Inflation
 Political Indicators
o Stability
o Govt. Efficiency
o Regulation Quality
o Corruption Index
 Teledensity
o Fixed Line Penetration
o Mobile Penetration
o Internet Penetration
 Infrastructure
 Competitive Landscape
o Operators
o Market Share
o Revenue
 FDI Inflows
o Quantity
o Quality
o Trade ties with other countries
 Licensing, Liberalization & Regulation

 Investment Viability
2.3 Data Collection
2.3.1 Data Collection Sources

Secondary data sources:
o Electronic resources (world wide web)

o Reports
o Newspapers
o Magazines and journals
o Bloomberg
Primary data sources:

o Interview
 Bocar A. BA, Senior Vice - President, SAMENA Telecommunications
Council.
 Izhar Ahmad, Senior Manager – Market Research, SAMENA
Telecommunications Council.
 Bhaskar Peruri, Sales Director - Middle East, Pakistan & Egypt Proxim
Wireless Europe B.V
 Nikhil Iyer, Associate Vice President, Kotak Mahindra Limited
 Andrew Brierly, Associate – Investment Management, Ernst & Young
2.3.2Data Collection Methods

Cross Sectional Data Sheet
An Excel spreadsheet was formatted to comprehensively capture the data that was collected
for all the countries. The spreadsheet had the list of all the countries and the parameters they
are measured against for the purpose of this study.
The Cross Reference File helps in easy comparison of countries against each other, which is
the main reason why this particular method of Data Collation was chosen.
Snapshot of the Spreadsheet
Figure 3
Listed below are the various heads under which data was collected to help in the research:
Headings Sources
Telecom Characteristic Internet
Liberalization/Licensing & Industry

Activity Internet
Economic Characteristics Internet

GDP (US$ billion) World bank
Real GDP Growth (%) World bank
Population World bank
Population Growth (historical avg) World bank
Per Capita GDP World bank
Inflation World bank
FDI inflows (% of GDP) World bank
Leading Countries with trade ties Internet
Main telephone lines ICT,ITU,Internet
Mobile subscribers ICT,ITU,Internet
Internet users ICT,ITU,Internet
% of main Telephone Lines ICT,ITU,Internet
ICT, ITU,
% of Mobile Subscribers Internet
ICT, ITU,
% of Internet Users Internet
Political Characteristics Internet
Political Stability Score World bank
Government Efficiency Score World bank
Regulation Quality Score World bank
Penetration World bank
Table 1
Questionnaire
An exhaustive questionnaire was prepared bearing in mind the target audience. Considering
the nature of this study, Primary research needed to be an active interaction with specialists in
the field rather than a questionnaire.
Therefore, the focus was on scheduling interviews. The questionnaire was intended to collect
information from those resources that couldn‟t spare the time for an interview.
Salient Features of the Questionnaire:
o Brief & Exhaustive

o Simple & Self Explanatory
o Close Ended Questions
o Multiple Choice/Selection type questions
o Questions framed in a logical order
Please refer to Appendix C for the questionnaire.
2.4 Data Analysis

Analysis of Parameters
The data collected and collated in the cross reference sheet based on the parameters selected
needed to be weighed in order of importance from the point of view of a Telecom investment.
The parameters were consolidated to the following six:
Table 2
* it is important to note that Political Environment was a calculated average of the scores
assigned by the World bank on Government Efficiency, Political Stability & regulatory
Quality.
Assigning weights:
Primary research helped in ranking the above parameters in their order of importance.
Once these parameters were in order, it was required for this ordinal data to be converted into
a quantitative scale to be able to rate the countries based on the respective parameters and
calculate an overall score (process explained later). For this purpose we assigned weights to
these parameters based on certain logic.
Since it was difficult to quantify how important each one of these parameters was, we
decided the weights would have equal intervals.
We then tried assigning simple weights of 1, 2,3,4,5 & 6
Table 3
Since the interval between these weights was 1 unit, the total score for quite a few countries
were the same or at least within a small range because they had almost fared equally among
some of the parameters and the differences in the other parameters were set off.
Due to this deficiency in demarcation, we decided to increase the interval between the
weights to 2.
The new weights assigned were 1, 3,5,7,9 & 11

On studying the overall scores, the interval seemed fair enough. Although there still exists
countries which have the same overall scores, this is mainly due to the reason that the
countries have similar characteristics and have fared equally rather than a deficiency in the
weights assigned.
These weights were later used to multiply with the parameter score, calculated under the
average & percentile method (explained later in this document) to arrive at a total score used
for comparison.
2.4.1Data Analysis Tools:

From data analysis point of view, it is important to note that we have divided the African
Countries as:
1) South Africa (out of scope of this study)

2) North African Countries (Algeria, Egypt, Libya, Morocco & Tunisia)
3) Sub Saharan African Countries (Comprises of a list of 48 countries)
This preliminary classification is based on the level of economic development. South Africa
is the most developed country in the continent with a highly mature telecom market. The
North African Countries have a similar telecom history and belong to that stage of
development which is slowly evolving into a mature market with a high growth potential in
the very near future.
Sub Saharan Africa consists of those countries with relatively low levels of penetration and
telecom development. This is the segment where most of the investors are currently focussing
on due to the high returns in a relatively short span of time. As a result of which, the focus of
our study has also predominantly been in this segment without ignoring the North African
Countries.
Figure 4
Simple Average Quantitative Method I

This is a method we devised to classify the countries on a 3 point scale depending on how
good the country is on each parameter as against the average of the cluster.
Here the 3 point scale being:
Good Avg Bad
3 2 1
Good (3): A country would be classified as good against a certain parameter if it is

significantly above the average.
E.g. Algeria, Population of 33.4 Million as against an average of 30.4 Million as the range
subjectively decided was +/- 1Million.
Average (2): If the country measures a score in the average range of the cluster, it would be
rated 2. The range, however, would subjectively vary from parameter to parameter.
E.g. Algeria, Penetration of 62.5% as against an average of 55.2%. Here again the range was
subjectively decided to be +/- 10%.
Note: Penetration & Inflation are those parameters which are better if they are lower.
Therefore when the range below average are considered good and the range above average is
considered bad for the sake of Penetration.
Bad (1): Quite simply, the measure lying below average is considered bad. In certain cases
this is looked at subjectively on a case to case basis.
E.g. Both Burundi & Zimbabwe is rated Bad as far as Inflation is considered for the exact
opposite reasons. Burundi faces a deflation of -8.4% and Zimbabwe is facing Hyper Inflation
of 1016%. Cases such as these would be looked at subjectively.
Scores
Once these countries are rated as per the priorities in the above manner, these ratings are
multiplied with the weights (explained in a section earlier) and summed to get the final score
for the country.
Table 4
We have then taken the top 25% of the countries into consideration based on these scores.
Advantages of this method:
 Simple & Easy: This method of calculation is fairly simple as the only quantitative
method it uses is the simple average. It is therefore easy to band the countries into
Good, Bad & Average
 Middle Value: As it calculates the average and compares the same against other
countries, we have an average basket to classify some of the countries and this is
important from the point of view that these parameters often do not clearly fit into
Good or Bad.
 Thin Line of Demarcation: The reason we could not use a 4 point scale, namely
Very Good, Good, Average & Bad is because a) it is often difficult to distinguish
between Good & Very Good under these parameters and b) from telecom investment
point of view, it does not matter if it is good or great, for e.g. If you consider Political
Stability, it does not matter if it is very good or good as from a telecom investment
point of view, all that matters is that there is political stability based on World bank
Definition.
 Subjective Input: In this study it is extremely important to have some subjective
input in deciding the range of the parameters. The parameters are such that it requires
a judgemental approach. For e.g. Deciding on a range of +/- 1 Million for Population
etc has been the subjective aspect of it. Also in parameters such as Inflation &
Penetration, where it initially seems like the lower the better, we obviously know that
very low levels of Inflation can impede growth and extremely low penetration could
indicate something about the technology in the country.
Limitations of this method:
 No Standard Range across all parameters: This is the adverse effect of having an
analysis tool which is in part subjective. It could be influenced by various biases and
imprecision when such a call is made by one person. Therefore we have discussed
each parameter as a team and then have finally concluded the analyses to do away
with this limitation of the study.
Percentile Quantitative Method II

In this method, the actual scores are converted into Percentiles to find out where the
country stands among other countries when measured for a particular parameter. This
method brings about a standard across all the parameters measured, the standard being
the percentiles. For certain parameters where the lower was better, we have calculated
the inverse percentiles (i.e. 1- percentile) eg. Inflation,Penetration etc.
Scores
These percentiles are then multiplied with the weights (explained earlier in section) and
summed to get the final score for the country.
Advantages of this method:
 Each country is comparable: In the percentile method the overall scores would be
way different and each country would be ranked in an order. Therefore the countries
are comparable against each other, asa against method one where they are classified in
three major categories – Good, Bad & Average.
 Standard maintained across: This method is better than the simple average method
in the sense that it maintains a standard across all the parameters and does not have
differing ranges as in Method 1. The standard here being the data is completely
converted to percentiles.
 No Subjectivity: Since this method is purely quantitative, there is no judgement
required and gives no room for such human errors and bias.
Limitations of this method:
 Inverse Percentile Calculation: While the Simple Average method is fairly simple,
this is not all that straightforward. Certain parameters are such that they cannot be
measured like any other because of the nature of the parameter. i.e. For Inflation &
penetration, the inverse percentile needed to be calculated as unlike the other
parameters, the lower these measures are the better.
 Qualitative validation Required: This limitation also arises due to the parameters
such as inflation & Penetration being part of the data. While the lower these measures
are the better, this does not hold good after a certain point. This means that both these
parameters are such that if it gets really low, it turns into a negative instead of a
positive attribute. Eg. While really low Inflation/Deflation impedes growth, Deflation
& extremely low levels of Penetration could mean the country isn‟t technologically
sound. This could be a possible reason why the telecom development is not up to the
mark thereby having very low penetration. Qualitative Analysis is required to point
out these aspects which this method does not allow.
2.5 Qualitative Method I & II

Primary Research & Secondary Research
For the sake of Analysis we have used Primary & Secondary Research as the qualitative
aspect of the study to back up the results found from the Quantitative methods.
Our Primary Research resources were asked to list countries based on the following factors:
 Lucrative Investment
 Risk Involved
 Telecom Infrastructure
 Technology
 Liberalisation
 Regulation
It is worth noticing that most of these factors are those characteristics which form the
qualitative aspect of the study and expert opinions are extremely important for this reason as
there is no readily available information for the same.
3.0 Finding and Analysis

The output of the 3 different methods used for analysis were a little different from each other
because of the underlying differences in the base of the model.
From the list of all sub saharan countries the first quartile was chosen and ranked in
descending order. The first quartile was chosen to limit the number of investment option and
because 25% of the population was considered an appropriate size for selection.
For North Africa, the top 3 countries were chosen on the same grounds.
3.1 Method I
The following outlines the output list for Method – I with their respective scores:
North Africa Score Sub Saharan Africa Score
Egypt 100 Angola 96
Morocco 98 Benin 86
Algeria 89 Ghana 75
Tunisia 78 Tanzania 75
Libya 53 Uganda 75
Table 5 Nigeria 73
Burkina Faso 71
Cameroon 70
Namibia 70
Sudan 70
Senegal 70
Mozambique 70
Table 6
The following is a pictorial snapshot of list of countries from Method I.

Figure 5
3.2 Method 2
The following outlines the output list for Method – II with their respective scores:
North Africa Score
Tunisia 21.41
Algeria 19.75
Libya 18.75
Egypt 16.75
Morocco 13.00
Sub Saharan Africa Score
Ethiopia 25.74
Niger 23.85
Sudan 22.76
Cameroon 22.43
Mail 21.77
Burkina Faso 21.67
Guinea 21.42
Angola 21.40
Madagascar 21.10
Tanzania 20.24
Mozambique 19.93
Chad 19.90
Table 7
The following is a pictorial snapshot of list of countries from Method II.

Figure 6
3.3 Primary Research
Findings from Primary Research:
Interview with Mr. Bocar A. BA (Senior Vice - President, SAMENA

Telecommunications Council) gave us first hand information about the telecom sector and
its prospects in Africa. He has been working in the telecommunication sector for over 7 years
and has great expertise in this field, he is very optimistic about the growth in the African
telecom sector especially in the sub Saharan region.
Algeria, Egypt, Kenya, Mozambique and Morocco is considered to have good telecom
infrastructure according to Mr. Bocar. However he does not feel that the existing telecom
infrastructure will play a significant role in deciding the future of telecom growth in African
countries.
“If there is potential, Infrastructure will follow! Its opportunity that drives investments in
infrastructure and not the other way round” says Mr. Bocar.
“Three P`s” that are the most important factors for a telecom investor: Population,
Penetration, Policy.
“Most African countries are liberalizing their telecom sector and therefore the policies are
framed keeping the interests of the investors in mind, so policies are not that worry us
anymore” quoted Mr. Bocar.
He cites that Egypt, Tanzania, Ghana and Zambia has favourable regulatory conditions for a
telecom investments thereby improving the chances of higher returns for a private equity
investor as well. Political instability and corruption plays on the minds of investors but does
not hold enough weight age to deter investors from investing in a particular economy.
Mr. Bocar feels Democratic Republic of Congo, Kenya, Mozambique, Nigeria, Gabon and
Ghana are some countries which should yield a high return on investment in the near future.
The low telecom penetration levels, fairly high population coupled with flow of grants and
funds from foreign countries make them attractive investment destination. When asked about
UAE investors perception on the African markets he said “Etisalat has always been interested
in Africa and it has special interests in Egypt, the perception of investors is slowly changing
in UAE and they have started looking beyond Europe and America to park their funds”.
Mr.Bocar highlighted the importance of several emerging trends and technologies, he
mentioned MVNO (Mobile Virtual Network Operator) as an emerging trend.
He also mentioned China`s role in the development of African telecom sector. China is one of
the many countries which has started investing in a big way in some of the sub-Saharan
countries and Chinese companies are increasingly providing technology and infrastructure
development services to most of the sub-Saharan and North African countries.
Mr. Izhar Ahmad (Senior Manager Market Research, SAMENA Telecommunications

Council) was kind enough to share some of his insights about the booming
telecommunication sector in Africa. He says Algeria, Egypt, Ghana, Kenya, Mozambique,
Morocco and Mauritius are witnessing improvement in telecommunication infrastructure. Mr.
Ahmed feels demand for value added services will grow and therefore bring about newer
opportunities in some of the more mature telecom markets like Tunisia, Botswana etc.
“Broad band internet and 3G mobile services are getting up the popularity charts and most
telecom companies are responding” said Mr. Ahmed.
According to Mr. Ahmed countries such as DRC, Kenya, Morocco, Nigeria, Ghana, Zambia,
Tanzania and Senegal will be place to watch out for if one is looking for high return on
investments form the telecom perspective. On the one hand He considers political
exploitation, high unemployment rates and shortage of skilled man power as factors which
could impede the telecom growth and on the other hand he feels lower handset costs,
international aid through subsidies and increased demand for telecom services will help drive
the telecom sector to new heights in most of the African regions.
Interview with Mr. Bhaskar Peruri (Sales Director Middle East, Pakistan & Egypt,
Proxim Wireless Europe B.V) gave us an insight on the prevailing technology in the
telecom sector. He specializes in the North African and Middle eastern region. He believes
that Egypt and Morocco are perceived to be the next big markets in the African continent.
Mr. Peruri is of the opinion that technological changes are similar to human evolution and
Africa has jumped an evolutionary step and therefore will be blessed with technologies like
Wi-Max (Worldwide Interoperability for Microwave access) and VSAT without going
through the pain of installing basic telephone or broadband infrastructure.
According to Mr. Peruri Algeria and Egypt are two countries which will have higher returns
in the near future. The aggressive liberalization measures and new foreign investments make
these two countries attractive destinations in the North African region.
He echoes the sentiments of other investors by saying “Political instability, corruption and
religious hard lining may be present in the North African countries but have no relation with
the aggressive growth in the telecom industry, whatever the political state of a particular
country people will always need to communicate and that‟s where we come in…”.
In an interview with Mr. Nikhil Iyer (Associate Vice President, Kotak Mahindra
Limited) we discussed about the UAE investors perception of the telecom story in Africa.
Mr. Iyer was bullish on the African growth story and felt telecom, infrastructure development
along with healthcare will drive the investment wave in most African nations for the next
decade. Mr. Iyer spoke about the Mo Ibrahim foundation and how it helps to have initiatives
to attract foreign investments into Africa.
Mr. Iyer cited several examples such as that of Ghana looks set to achieve middle-income
country status by 2015 already Ghanaians access to electricity is the highest in Sub-Saharan
Africa outside South Africa, In Algeria foreign investors benefit from tax incentives,
including five-year tax relief for companies investing in new projects, in Tanzania the mining
sector, particularly gold mining, should pick up as new projects come on stream in late 2007
and output increases. He said European investors look at Africa as a hedge against the
standard risks existing in the world markets as African markets do not follow any patters
similar to other market.
He would put his money on Ghana, Algeria, Kenya and Nigeria when it came to returns in
the next 3 – 5 years time frame. He also pointed out that political instability does not have a
big impact on investors mindset as they already know about the political situation and their
returns weigh much higher than the perceived risks.
Key findings from the questionnaire
 Population, telecom penetration, economic conditions and foreign direct investments

are four of the most important criteria‟s investors look out for when investing in the
telecom sector of a particular country.
 Political conditions have limited influence on the telecom investors‟ sentiments.
 Certain countries in Africa is perceived to be low risk and high return proposition,
however there are countries which are also perceived to be High Risk and Low Return
proposition.
 Nigeria , Kenya and DRC are looked upon as great prospects for telecom investments.
 UAE investors are positive about the African telecom markets and are looking at
these investments in the near future.
Primary research data was collected from experts in the relevant field wherein their
preferences were asked about the countries for investment.
The following is a pictorial snapshot of list of countries from primary research:
Figure 7
3.4 Final List of countries

The final list of countries was selected based on:
a) The common countries under all three methods
b) Strong reasons given by primary resources
After the analysis was performed, the following final list of countries was chosen for
recommendation for investment now:
Figure 8
There are a few countries that fell short of certain parameters in one of the models but were
weighed just below the scale of the good prospect investment options. These countries will be
the possible future drivers in the telecom sector. The list of countries are:
Figure 9
3.4.1 North Africa
Egypt
Egypt is a self sufficient country with abundant energy resources e.g petroleum, coal and
natural gas. The country‟s GDP in the year 2006 was 107.5 billion which has grown at a rate
of 6.8% jumping from constant 3% for the last one decade. The country has undergone
significant economic reforms incuding the few listed as follows:
1. Tariff reductions and customs reforms: Tariff reductions have been done to attract
foreign investments to fuel growth in the economy.
2. Tax rates cut to 20% in fiscal year 2005: To encourage more money circulation in
the economy to inject growth.
3. Revisited and revived privatization: The focus of the government is gradually

shifting towards economic development through privatization.
Telecom Market
The following are the telecom industry highlights:
• Average mobile spending as percentage of GDP is estimated at 1.7%.
• Etisalat of UAE recently won the 3rd GSM license with 3G entitlement for US$ 2.9
billion and launched operations in May 2007.1
• Telecom Egypt owns 45% stake in Vodafone Egypt.1
Egypt has adopted a liberalized attitude towards granting entry to private players. The
following are the findings on the regulations front:
• ECMS operates a GSM license which is due to expire in 2013
• Regulators introduced number portability in 2007
Competitive Landscape
The telecom sector in Egypt has the following players:
Figure 10
Mobinil is a telecom subsidiary of Orascom operating in Egypt. The revenue growth of

Mobinil for 3 years has been:
Figure 11
Mobinil revenues grew at a CAGR of 43.42% from 2005 to 2007.
Telecom Opportunities
 Egypt has total mobile penetration of 24% and the total population of 75.4 millions.
People who cannot afford basic ammenities constitute 5% of the population. An
untapped market of about 71% is attractive for investment.
 Egypt is a developed market in terms of infrastructure developments and setup. For

telecom players, developed infrastructure decreases their fixed cost or setup cost
leading to low entry load.
 Egypt‟s liberal moves to make it a diverse country in terms of economic development

will open up doors for private equity and foreign investors. It is unlikely that the
government's commitment to economic reform will change even in the event of a
government reshuffle which may occur towards the end of the year.
1
The telecom developments have been cited from the Orascom-Mobinil annual report 2006
 The listed companies in Egypt follow Egyptian accounting standrads adhering to

IFRS indicating tranparent and credible financial reports.
 Egypt has made the fastest climb to the top of the list in ease of doing business. Doing
Business 2008 has forecasted that large emerging markets are reforming faster and
Egypt has similar potential.
 The Doing Business report shows “equity returns are highest in countries that are
reforming the most," said Michael Klein, World Bank/IFC Vice President for
Financial and Private Sector Development. This should give an upside edge to Egypt
in terms of expected returns while exiting the private equity investment.2
Algeria
Algeria is the second largest country in the African continent. GDP in the year 2006 was
$113.2 billion which has grown at a rate of 3%. The country has had significant economic
reforms incuding the few below:
 Strong fiscal surpluses are partly redistributed by investing extensively in

infrastructure, expanding the civil services and raising public-sector wages.
 The government is beginning to liberalise in certain areas of the economy. Algeria's

state-owned banks was privatised in 2007. Large amounts of foreign investment have
been drawn into the telecommunications, housing, power and water sectors in this
year.
 There exists tax incentives for foreign investors. e.g: Five-year tax relief for
companies investing in new projects.
Telecom Market
 Algeria‟s mobile market grew at the rate of 200% exceeding all expectations.
 The country‟s fixed-line market is behind the other relatively developed North
African markets, but accelerated developments in this sector is expected from 2007
2
Doing Business 2008--the fifth in an annual series issued by the World Bank and IFC
onwards resulting from the upcoming privatisation of the country‟s incumbent

telecom.
 Improved fixed-line and wireless infrastructure will also stimulate the country‟s
underdeveloped Internet market. The introduction of Third Generation (3G) mobile
technology is currently being implemented.
The telecom sector in Algeria has the following players:
Figure 12
Djezzy is a telecom subsidiary of Orascom operating in Algeria. The revenue growth for
Djezzy for past 3 years has been:
3
GDP forecast has been cited from Economist
Figure 13
The revenues grew at a CAGR of 26.51%
 Telecom opportunities lie in Algeria because of investments in infrastructure and

increasing active reforms for economic development.
 The current penetration in Algeria is about 60% with a population of 33.34 million.
Untapped market is high due to high population. Per capita GDP stands at $3393.
 A fairly developed market in terms of infrastructure leading to lower fixed cost for
new players.
 The accounting standards in Algeria can be concluded to be credible. It follows

Egyptian accounting standrads and is in adherence to IFRS.
Morocco
Morocco is one of the rare Arab countries in the Middle East & African region, which does
not have significant oil and gas resources. Morocco‟s economy is fairly stable with
continuous growth over the past 30 odd years, but is still considered one of the poorest
countries in the North African region with people having low spending power. The country is
considered to have attractive investments and good infrastructure.
The country has had the following economic reforms:

 Foreign nationals can invest freely in all the sectors without any screening or
preliminary authorization.The constraint to receiving high level of investments is
the prevalent bureaucracy in the country. The country's complicated tax system
and relatively high tax rates have long been identified as major constraints on
business.
 According to the Index of Economic Freedom, 2007 Assessment, Morocco's
economy is 57.4 percent free, which is considered high when compared to the
other countries in the Middle East.4
http://www.heritage.org/research/features/index/country.cfm?id=Morocco
Figure 14
Morocco has 2 mobile players and 2 fixed line operators. Their incumbent, Maroc Telecom,
provides land line phones, mobile phone lines, and internet access. Maroc telecom started its
privatisation back in 2004 by selling 34% of its stake. It then sold another 16% of its stake in
2005 because of the immediate need to fund major economic and social reforms. The
company is listed in both Casablanca Stock Exchange and Euronext Paris.
The telecom sector in Morocco has the following players:
4
http://www.heritage.org/research/features/index/country.cfm?id=Morocco
Figure 15
The revenue growth for Maroc Telecom for 2 years has been:
Figure 16
Morocco has certain characteristics typical of developing countries:
 Restraining government spending
 Reducing constraints on private activity and foreign trade
 Check on inflation to keep it within manageable bounds.
 The government of Morocco has announced a tender for "custom-made new

generation" telecommunications licenses that will allow both fixed and mobile
services. The licenses are "open" in terms of what a bidding company or consortium
proposes to provide in technology, services, use of existing or new infrastructure, and
5
coverage targets.”
 The Moroccan market has strong growth potential. Projected growth over the next 5
to 10 years is 3 million new fixed subscribers, 9 million new mobile subscribers and
500,000 to 1 million new Internet subscribers.
 There is a steady low inflation rate of 2.7%. The inflation is constantly kept in check.
Tunisia
Tunisia has the most competitive economy in Africa and the Arab world. It moved seven
places up to 30th position according to the latest Global Competitiveness Report 2006-07
released by the world economic forum in terms of global competitiveness. This is primarily
due to the way economy is successfully diversified, openness to the external world with
exports a catalyst for growth, sound and effective management of resources. Its varied range
of exports accounts for 50% of GDP.
Tunisia had a sustained growth rate with average GDP growth rate in the last five
years had been around 5.2% and the forecasted GDP growth for the next four years is about
6.1%.
Tunisia‟s legislation and regulations is transparent across all levels:
 Privatization and contract procurements are done through bids
 To make sure there is transparency in commercial transactions, the competition and
price law which is applicable since 1991 is followed.
 The accounting methodology followed is the one used in OECD countries.
 For first ten years of operations related to agricultural projects, regional development
projects, there is total tax exemption on profits and after 11th year it‟s at the rate of
10%.
5
An article from http://pulse.tiaonline.org/article.cfm?id=2170
Freedom to Invest
 Nationals and foreigners have the freedom to invest in various sectors in Tunisia.
Foreign investors do not need any formal authorisation and can keep up to 100%
capital in a particular project in most sectors.
 Tunisia has received top investment grades from financial institution and rating
agencies. American agencies (BBB and Baa2), European Agency (BBB) and Japanese
agency (A-) have awarded Tunisia with this distinction which shows the tremendous
confidence the international financial community has on Tunisia.6
Telecom Sector
 Tunisia‟s telecom sector is one of the most dynamic sectors which have experienced
tremendous growth rates. There had been huge investments in the establishment of
telecom infrastructure which has resulted in a fully digitized national network, 6500
kilometres of optic fibre highway, national and regional loops using SDH technology,
service network architecture moved to large-band multi service architecture,
information freeways and data, strong international network.
 In 2006, partial privatization (35%) of Tunisie Telecom took place to Dubai‟s Tecom-
Dig for US$ 2.24 billion.
 Estimated average mobile spend as percentage of GDP is 2.5%
Telecom Players
 Tunisia is a two player market with Orascom Telecom Tunisie - Limited Company
Tunisiana having a market share of 47% as of June, 2007 and Tunisie Telecom
which is the incumbent and telecommunication and service provider in Tunisia and
has a market share of 53%
6
The ratings have been cited from the Orascom-Mobinil annual report 2006
Figure 17
Tunisiana, a subsidiary of Orascom telecom in Tunisia has witnessed growth in revenues over
the last 3 years. The following are the revenue indicators in Tunisia
Figure 18
License and Regulations:
 Tunisiana was granted a license in May 2002. The licence is due to expire in 2017 and
renewable for a five year period. Using this licence, they are free to operate
international gateway.
 “Instance Nationale des Telecommunications,” is the local authority for telecom
regulation in Tunisia.
 Tunisia‟s telecom sector has experienced tremendous growth rates and has one of the
most developed infrastructures in North Africa which shows that there is a huge
potential in this sector which can be exploited
 Various networks are available in Tunisia and communication can be established from
almost anywhere in the world.
 Improved technical and financial conditions for the acquisition of powerful telephone
systems are meant and bound to attract foreign investors.
 Sound regulatory framework makes it an attractive option for the investors.
Economic Snapshot
(% of
2006 2007 2005 2006 2007 2008 2009 2010 in Million %age USD %age
GDP)
Algeria 113.2 125.3 5.3 3 4.8 5.3 5.9 6.2 33.4 1.5 3393 2.3 2.6
5400
Egypt 107.9 - 4.5 6.8 - - - - 74.2 1.8 1454 6.2 Mn
(2005)
1600
Morocco 57.3 59.08 1.7 7.3 3.1 5.1 5.6 4.9 30.9 1.1 1988 2.7 Mn
(2005)
4.3
Tunisia 30.3 32.12 4.2 5.2 6 5.6 5.1 5.8 10.2 1.1 2959 3.1 723
Mn
(2005)
Table 8
Penetration Overview
% of
NORTH Main telephone Mobile % of % of
Population Internet users main
AFRICA lines subscribers Mobile Internet
Telephone
Subscribers Users
000s 000s p. 100 000s p. 100 000s p. 100 Lines
Algeria 33354 2841.3 8.52 20998 62.5 2460 7.38 8.52% 62.95% 7.38%
Egypt 75437 10808 14.33 18001.1 23.86 6000 7.95 14.33% 23.86% 7.95%
Morocco 30735 1266.1 4.12 16004.7 52.07 6100 19.85 4.12% 5207.32% 1984.71%
Tunisia 10210 1268.5 12.42 7339.1 71.88 1294.9 12.68 12.42% 7188.15% 1268.27%
Table 9
3.4.2 Sub Saharan Africa
3.4.2.1 Good Prospects

Ghana
Ghana is one of the potential emerging economies in Africa. Ghana has brought down
poverty levels by improving policies and institutions. Ghanaians access to electricity is the
highest in Sub-Saharan Africa outside South Africa.
It has invested in infrastructure and basic services to improve economy and living conditions.
Ghana looks set to achieve middle-income country status by 2015. The country‟s GDP in
2006 is 12.9 billion which has grown at a rate of 6.2%.
The telecom market in Ghana has the following most recent developments:
 First GSM operator acquired in 1998 with partner France Telecom.3
 11.9 m subscribers by June 2007.3
 Third license awarded to Etisalat telecom for US$ 2.9 bn.3
Telecom penetration in Ghana in is 23.09% and the population that cannot afford basic
amenities constitute 44.8% of the population. The untapped market comrises of 33.71%.
Milicom Ghana holds a major market share in Ghana telecom sector. Milicom Ghana‟s
revenue growth for the last year was:
Figure 19
Milicom has grown with a CAGR of 79.7% in 1 year.7
 Good Infrastructure and big available markat are 2 big factors for opportunities to
enter Ghana telecom market.
 Active mergers and acquisitions in Ghana in the telecom sector in the past years
indicates liberalized and well regulated telecom sector.
 Untapped market cose to 40%.
 Global accounting standards e.g. IFRS 7 and IAS 23 are being followed by the listed
telecom companies. It indicates tranparency and credibility in revenue reporting.
Kenya
Kenya is a populous country with a population of 35 million. Country‟s GDP in the year
2006 is $21.2 billion. The telecom penetration in the country stands at 19% which is very
low. The political stability in the Kenya is very volatile and acts as the only deterrance to
foreign investments. However, the liberalized market looks very attarctive for emerging
sectors like telecom.
7
Telecom developments cited from Millicom annual report 2006
Kenya has seen tremendous telecom investments in the last one year and the economy is
expected to get boosted by telecommunications, infrastructure development and financial
services sectors.
Kenya is looked at as an attractive investment opportunity for the following features:
 The estimated total population of the region is 35 million provides an impressive

consumer base. If the huge popoulation is added to the highly skilled human resource
capital and the availability of international transportation infrastructure with a
regional business hub.
 It‟s membership of the Common Market for East and Southern Africa (COMESA).
 Kenya is a member of the East African Community (EAC), where trade is expected
to flow freely by 2013.
 The Communication Commission of Kenya (CCK) director general, Eng John

Waweru, said "We were used to fixed lines, and history has it that fixed lines have not
solved our developmental issues.Telkom Kenya only managed to connect 300,000
subscribers, while mobile phones have added nine million more, this is a clear
indication that the future is wireless".
The following are the existing telecom players in Kenya:
Figure 20
Safaricom is a partnered entity of Vodafone operating in kenya. The following are the
revenue indicators of safaricom for 3 years:
Figure 21
Safaricom revenues have grown at a CAGR of 58.56%.
 Attractive investments into the country for infrastructure developments.
 Confidence in Kenya's capital markets are at an all time high according to a Business
Leadership Confidence Index prepared by the Steadman Group. The survey places
Kenyan CEOs confidence in the Kenyan atock market at 68% promising good
prospects for private equity exit strategies.
 High Population and low penetration leave a huge untapped market.
Nigeria
Nigeria is one of most populous African country with its population standing at 134 million.
The country‟s GDP in 2006 is $114.7 billion which has grown at the rate of 5.9%. Nigeria is
Africa‟s one of the biggest and fastest growing telecom markets. It attracts huge amounts of
foreign investment, and market penetration is 24% which is still at low levels.
The telecom market in Nigeria has the following most recent developments:
 Over 200 companies are providing virtually all kinds of telecom and value-added
services. The mobile sector has seen triple-digit growth rates five years in a row since
competition was introduced.
 A fifth GSM operator and four 3G mobile networks were licensed in early 2007.
 A new unified licensing regime designed to increase competition between fixed and
mobile network operators is expected to also give a boost to the Internet sector.
The following are the existing telecom players in Nigeria:
Figure 22
The following are the revenue growth trends of MTN Nigeria:

Figure 23
MTN revenue grew with a CAGR of 49%
 Nigeria attracts huge foreign investments as it portrays tremendous potential in the

telecom sector. Investors are with the perception that Nigeria‟s potential will be
unbeatable if the 134 million population can be trained and used to the economy‟s
benefit.
 Telecom Infrastructue is a development focus area for the government. Although the
political instability has had a toll over the country‟s economic development, the
country realizes that sectoral development is the key to harmonic economy.
 Huge population and low penetration
 Projected liberalization is an added attraction
Zambia
Zambia is a country in South Central Africa which shares borders with eight countries. The
population of Zambia is around 11.4 Million growing at the rate of 1.7%. Copper wealth has
made Zambia one of the most urbanized countries in Africa. It is known for its political and
social stability.
Economic Conditions:
 Zambia‟s GDP growth rate is around 6% is expected to reach 7% or more by the end
of 2007 due to new investments in mining, agriculture, tourism and other sectors.
 Despite progress in privatization and budgetary reform, Zambia's economic growth
remains somewhat below the 6%-7% needed to reduce poverty significantly.
 Inflation had been a cause of concern in Zambia. However, the rate of inflation has
dropped considerably since 2006 (first time in single digits).
 Zambian economy primarily reliable on the copper industry. Copper accounts for
more than 80% of the foreign exchange.
 The Zambian Government is undertaking an economic diversification program to
reduce the economy's reliance on the copper industry. This initiative is to exploit
other sectors like agriculture, tourism, gemstone mining, and hydro power.
Zambia has an independently regulated telecoms sector with three competing mobile
networks and a monopoly fixed-line operator, Zamtel. The three telecom players offering
cellular services in Zambia are: Celtel, Telecel and Zamtel. Of the three, Celtel is the
dominant player in the country holding up to 79% of the market share. It has 1.6 Million
customers till now. Its revenue has grown over the last few years. Last two years revenue
growth is shown in the below graph:
Figure 24
For a population of 11.8 million the mobile penetration is just 16%, so there is huge untapped
market.
With three mobile operators already there, growth in the market is expected fuelled by
increase in competition.
The infrastructure is developing fast with the rapid growth in the telecommunications sector.
To accelerate the telecommunication infrastructure in this region, The Development Bank of
Southern Africa (DBSA) has agreed to contribute $13.5-million to support a large-scale
network infrastructure development project to be undertaken by Celtel Zambia. Liberalization
of internet service and ease of an Internet service provider (ISP) to operate its own
international data gateway is bound to encourage investors.
The country‟s political stability, access to international markets, an educated workforce and
relatively good governance gives opportunities for foreign operators to invest in the Zambia‟s
telecom sector.
Tanzania
Tanzania with a population of around 39 million is heavily dependent on agriculture which

accounts for half of GDP, provides 85% of exports, and employs 90% of the workforce. It
has had a steady GDP growth of around 6.7 %.
The communications sector plays and will continue to play a major role in contributing to the
social and economic development of Tanzania. Telecommunication facilities are widely
available across the country and are linked to the world through the country‟s commercial
capital, Dar es Salaam.
Recent developments in Tanzania’s telecom sector
Tanzania becomes only the second country in Africa after South Africa to get the 3G
technology after the 3G HSDPA network by Vodafone Tanzania
Etisalat had raised its stake in Tanzania‟s fourth operator Zantel to 51%
The Tanzania Communications Regulatory Authority made a pioneer move in Africa, by

approving in 2005 a Converged Licensing Framework (CLF).
Liberalization and Regulation
The information and communication sector in Tanzania is completely liberalised. The

regulation in Tanzania is governed by Tanzania Communications Regulatory Authority
(TCRA) and its objective is to regulate telecommunications, broadcasting and postal matters
in Tanzania.
There are currently four licensed operators in Tanzania in addition to the government owned
fixed line company which is in the process of privatization. The mobile penetration as of now
is meager 16% but it‟s expected to grow leaps and bounds. The five operators are:
Figure 25
The revenue growth of Vodacom in the last three years is as shown below:
Figure 26
Telecom opportunities
Huge population of around 39 million the mobile penetration is only around 16%. With
increase in the number of operators and competition this penetration can increase to a large
extent.
After the convergence in licensing, Tanzania‟s telecom sector has become more appealing to
the Foreign Direct Investments (FDI) and domestic capital.
Infrastructure is developing with the increase in the spread of wireless technologies and
introduction of fibre optic cable fuelling the telecommunication growth
Increasing income per head will increase the demand for communication services.
Mozambique
Mozambique is characterized as a dual economy because of the large divide between the
capital-intensive sector and traditional sector, Mozambique‟s economy is today relatively
diversified. All sectors make an important contribution. Mozambique‟s economy is closely
integrated with those of southern and South Africa.
Agriculture in Mozambique employs about 80% of its population; therefore it is the main
focus of efforts to reduce poverty.
IMF and World bank has supported Mozambique‟s debt on several occasions.
Mozambique is part of the HIP (Heavily Indebted Poor) Countries. Total debt service relief
under the HIPC Initiative will amount to amount US$3.8bn, reducing total external debt by
some 73 %, and debt-service as a percentage of government revenue from 23 % to around 10
% over 2000-2010 and 7% from 2011-2020. Resources made available by debt relief will be
allocated to anti-poverty programmes.
Telecom Industry
There is a high disparity in Connectivity between the cities and the underdeveloped rural
areas in Mozambique. 64% of all lines are concentrated in the capital city, Maputo, and the
second and third largest cities in the country have 11% and 7% of all lines, respectively.
The Telecommunication Development Bureau (TDB) of the International

Telecommunication Union has launched its first Telemedicine project in Mozambique.
Telemedicine refers to the provision of medical services and health care via existing
telecommunications systems. The range of services includes medical consultation, pathology
diagnosis, education and emergency services.8
The cost of mobile telecommunications dropped dramatically after competition was

introduced and a second operator entered the market in 2003. Total teledensity went from 8
subscribers per 1,000 inhabitants in 2004 to 55 per 1,000 the following year.
Telecom reforms saw cell-phone users in Mozambique grow from 51,000 in 2001 to close to
2 million in August „07.Worldbank
Mozambique has 3 Telecom Players. The Incumbent Telecomunicações Móveis de

Moçambique, Lda operates both in the Fixed Line and Mobile space.
VM Sarl & Vodacom are the other two Players who together own less than 45% of the
market share.
The mobile teledensity with 3 players is 11.6%
8
http://www.uneca.org/aisi/NICI/country_profiles/Mozambique/mozaminfra.htm
• The Mozambique Government is privatising its Incumbent Telecom Network in a

big way
• Heavy Liberalisation and issue of new licenses to Foreign Investors
• Mozambique‟s Tourism Industry is developing at a fast rate. The Chinese

government has declared Mozambique as an official tourist destination for its citizens.
The government is taking steps to reduce the cost of doing business in Mozambique through
decentralisation, streamlining of licensing procedures, addressing the rigidities in the labour
market, and improving basic infrastructure, such as energy, roads and telecommunications.
• Steady GDP growth at 7%
• High scope for Telecom growth with current mobile penetration at 11.6%
Economic Snapshot
Per
GDP (US$ Population
Sub Capita
bn) Populat Growth Inflatio
Saharan Real GDP Growth (%) GDP
(Market ion (historical n
Africa (Market
Exchange) avg)
Ex)
in
2006 2007 2005 2006 2007 2008 2009 2010 %age USD %age
Million
Ghana 12.9 - 5.9 6.2 - - - - 22.5 1.9 573.3333 14.6
Kenya 21.19 22.36 5.8 6.1 5.5 5.2 - - 35.1 2.6 603.7037 -0.4
Mozambiqu
7.6 8.17 6.2 8.5 7.5 7.2 - - 20.16 0.024 376.9841 13.2
e
Nigeria 114.7 121 6.1 5.9 5.5 7.8 6 6.2 144 2.1 810 10.8
Tanzania 12.78 13.64 6.8 5.9 6.7 7.2 - - 39.03 2.6 327.4404 6.3
Zambia 10.9 11.55 5.2 6 6 6 - - 11.86 0.0211 919.0556 14.3
Table 10
Penetration Overview
Sub Saharan Main Mobile

Population Internet users % of
Africa telephone lines subscribers % of % of
main
Mobile Internet
Telephone
Subscribers Users
p. Lines
000s 000s 000s p. 100 000s p. 100
100
Ghana 22556 356.4 1.58 5207.2 23.09 609.8 2.7 1.58% 23.09% 2.70%
Kenya 35106 293.4 0.84 6484.8 18.47 2770.3 7.89 0.84% 18.47% 7.89%
Mozambique 20158 67 0.33 2339.3 11.6 178 0.9 0.33% 11.60% 0.88%
Nigeria 134375 1688 1.26 32322.2 24.05 8000 5.95 1.26% 24.05% 5.95%
Tanzania 39025 147.9 0.38 6240.8 15.99 384.3 1 0.38% 15.99% 0.98%
ZambiaTab 11861 94.7 0.81 949.6 8.14 334.8 2.87 0.80% 8.01% 2.82%
Table 11
3.4.2.2 Future Possible Drivers
A few countries in Africa can be vouched for potential future investment destinations. Their
present conditions have marred them from being an attractive option now, but with
developing trends they are definitely to be watched out for. Four such countries are Angola,
Democratic Republic of Congo, Sudan and Senegal.
Angola
Angola, with a population of 16.4 million, has a very low mobile penetration of 14.33%. This
gives the investors opportunity to exploit the untapped market and reap rewards considering
the tremendous growth in the telecom sector. Angola‟s economy is on the rise with both the
oil and non-oil economy performing considerably well.
There are two players operating in the market namely, Angola Telecom and Unitel. The
infrastructure has shown tremendous signs of improvement with nationwide fibre optics
network being implemented. With the privatizing and licensing of third mobile operator
being on the cards, Angola seems to have a good infrastructure to fuel the telecom sector
growth.
However, Angola had been marred by bad social and political conditions especially because
of the civil war conflict which lasted for about 27 years and finally ended in 2002. Since then,
there had been measures taken to bring stability to political conditions. The GDP had been
falling and had shown unsteady trends over the years. These factors don‟t make Angola a
good country to invest in presently. However, with better political and economical stability
and with the growth of telecom in the country, Angola can be seen as an attractive investment
option.
Democratic Republic Of Congo (DRC)
Democratic Republic of Congo is one of the poorest nations in the world with a huge
population of 59.4 Million. The mobile penetration is extremely low at 4.63% despite the fact
that there are five players operating in the market. This may be attributed to highly unstable
political conditions and corruption. Also the income rates had been quite low. The quality of
regulation had been poor as well.
However there had been a reshuffle intended to inject some dynamism into seemingly
aimless government and it intends to modernize its telecom system with the rise of mobile
telephony and wireless technologies. As a result several regional and international telecom
players have started showing interest in the market. The GDP also has shown steady trends.
With further improvement in government‟s policies and telecom growth, DRC seems to be a
bright option for future investments.
Senegal
Senegal with a population of 11.94 Million had been beset by energy crisis that caused
widespread blackouts in 2006 and it relies heavily on external assistance. Also it had been
one of those countries in Africa which wasn‟t given much attention in terms of growth and
development. One of the reasons is the fact the country had been relatively slow in
implementing liberalization and regulatory policies.
Despite these unfavourable factors, Senegal has shown considerable development in the
telecom sector with increase in mobile telephony. However the mobile penetration is quite
low at 24.5%. With increase in competition, development in the infrastructure – already the
quality of the network in terms of fibre optical backbone, digitisation is quite good - it seems
to have to good potential to reach higher levels of penetration levels.
Sudan
Sudan telecommunication sector is still considered to be in its nascent stage and huge
investment opportunities exist with the realization of peace and stability in the country. With
a population of 39.4 million and a low penetration of 12.66%, like other countries Sudan also
has huge untapped market. The ease in liberalization and privatization policies has fostered
the growth of modern and fully digital infrastructure in the country.
However, Sudan still faces formidable economic problems starting from the low level of per
capita output. Also, Sudan is still an oil dependent economy and other sectors are in the
developing phase.
3.4.3 Proxy Country Analysis
3.4.3.1 Pakistan : Benchmark Country

Due to political, social and economic similarities we consider pakistan as the benchmark
market for projection of growth in the Telecom sector in key African economies.
Some key political, economic and telecom sectoral factors:
 GDP of US$ 145 billion with an annual real GDP growth of about 7%.
 Population of 165.4 million growing at 2.1% per annum.
 An emerging economy like most other African economies.
 40.5% Teledensity (mobile, WLL) much above most African countries.
 6 major players in the Telecom sector.

Source : Pakistan Telecom Association
Figure 27
 Like most African nations Pakistan has had an unstable political history with millitary
dominating the political landscpe.
 Pakistan has primary Trade relations with US , Germany, China , Middle Eastern
Countries.
 Pakistan is an Islamic republic which makes it similar to most African countries in

terms of religious demographics and culture.
 Our analysis shows Kenya , Ghana and Nigeria to be economically and politically
strikingly similar to Pakistan. All these countries have their per capita GDP within the
range of USD 575 and USD 850. The telecom penetration are relatively low and all of
these countries are fairly high in terms of popuplation.
The Sub Saharan and North African (shortlisted countries) weighted average mobile
penetration currently stands at about 28.61 % as oppose to Pakistan`s mobile telecom
penetration of 40.5%.
The following histogram shows the projected growth in Mobile penetration(%) in Ghana,
Kenya, Nigeria and Pakistan. Pakistan‟s mobile penetration growth is assumed between a
conservative range of 5% to 10% YOY with a modest CAGR of 8.9%. Our analysis projects
that Kenya‟s subscribers base would grow from 9 million subscribers to 14 million
subscribers by 2012 ,Ghana‟s subscriber base will grow from 4.8 million to 11.1 million by
2012 and Nigeria is projected to add 23 million new subscribers by 2012. Pakistan with its
phenomenal growth in telecom is projected to over shoot 55% mobile penetration by 2012.9
Source : Pakistan Telecom Association | Morgan Stanley Research
Figure 28
3.4.3.2 Correlation
Any non cyclical industry in an economy grows in tandem with the nominal GDP. This fact
has been proven time and again by emerging and non emerging economies. To substantiate
the correlation between telecom growth and GDP growth the following exercise was carried
out where the folowing results were found:
9
Pakistan Telecom Association
Table 12
The telecom revenue growth and GDP growth trend analysis reveals the following trend:
Figure 28
3.5 Investors Perceptions
Investors in Nigeria Telecom

Political risk and business risk are not necessarily correlated. You can have a thriving
telecom‟s business in a place where political risk is pretty high. Other investments will
expose us to the way Nigeria goes. Our view is that democratic reforms are entrenched, now
the economic reforms are as well. There may be some slowing in the pace of development
but we don‟t think it‟s going to go backwards.10
3.6 Mergers and Acquisitions

As part of the analysis, mergers and acquisitions in the African region were studied to
understand the openness of the African market. The following are the significance of M&A
activities: 11
 MEA is considered largest potential markets for improved communications
 M&A activities show the degree of openness of the market and also provides with
possible exit opportunities for a private equity investor
 Renewed interest in M&A activity can be attributed to two factors:
 Strong consumer demand for telecom
 Govt‟s encouragement for private investment
 Privatization seen as the strategic option to source additional revenue to sustain

spending and economic growth
 MEA is one of the world‟s largest potential markets for improved communications,
but much of that potential has remained untapped especially in Africa in some new
types of services and technologies, namely, 3G, NGN, implementation and
broadband IP infrastructure.
10
Business Week article
11
Teletimes International
 This new competition arena is heavily favoured by a strong wave of telecom

liberalization in the region to attract significant investments in the telecom industry,
to attract new entrant
 Mergers and Acquisition schemes are increasingly being seen as the means to meet
the burgeoning demand for telecommunications need.
 One of the facets of M&A motivation was to address the need for massive growth by
capturing an existing market with a low penetration rate and then boosting it by
expanding the service through telecom network management expertise and
investment.
 M&A moves are driven by focus on bringing synergies among the various regional
opportunities they lead. Those will have a bright future in the telecom landscape
across the region as they increasingly accumulate and sustain a competitive
advantage
 M&A is an ultimate form of survival tactic for the growing and the ambitious operator
and market venture.
 The M&A trend in telecommunications has already started emanating from all
directions within the MEA region
4.0 Emerging Trends

MVNO
A Mobile Virtual Network Operator (MVNO) is a mobile operator that does not own its own
spectrum and usually does not have its own network infrastructure. It‟s an efficient entry
point for licensees whereby they purchase existing capacity from network operators, add their
own brand name, customer service, and billing systems and then sell this package to their
customers.12
A variety of companies, ranging from retailers to food producers, intend to become mobile
virtual network operators (MVNOs) in Africa. Becoming a MVNO can contribute significant
revenue to firms with well-established brand names at the same time allowing network
owners to sell capacity for little commercial and marketing cost.
Supermarket operator Carrefour in France is now offering mobile services. British MVNO
Virgin Mobile launched in South Africa. Analysis from Frost and Sullivan reveals that
revenues in the virtual operator space in the US totalled US$ 2.48 billion in 2004 and could
reach upto US$ 9.35 billion by 2011.
MNVOs operate in countries with some degree of telecom market liberalization. As the
liberalization of African mobile markets spreads, so too should attempts to develop the
MVNO business model in Africa.
"In West Africa there are about two to three companies per country that want to be an
MVNO within the next two years” – Mr. Bocar, (Sr. Vice President Global Operations,
SAMENA) on MVNO as a trend.
12
Electronic source: mobilein.com
5.0 Conclusion
Africa has not grown at the same pace with the world market. However, the opportunities in
Africa are huge since risk and return of the African markets move differently with the world
market, investment in Africa is being considered as an attractive investment diversification.
There had been increased support in the regulation and political environment front so as to
improve the governance of various countries. One of the foundations which are working
towards this is the Mo Ibrahim Foundation, founded by the African telecommunications giant
Mo Ibrahim which aims to provide good governance in Africa to make the political and
economic conditions better. The Foundation awarded an annual prize of $5 million over 10
years followed by an additional $200,000 for life to the former president of Mozambique who
has shunned corrupt practices in favour of legal and ethical conduct.
Private equity investments serve as an impetus to economic growth in Africa. Private Equity
investors don‟t become part of the management of the companies they invest in; rather they
invest in various companies, reap the rewards and exit through various exit opportunities like
exiting through an IPO or break up and sale of subsidiary.
Perceptions of investors, found as part of our primary research, have affirmatively established
that Africa is a “goldmine” as far as telecom investments are considered.
Appendix
Appendix A: Secondary Data, Economic indicator, Teledensity, Political
indicators
Appendix B: Regulatory Quality and Political stability

Appendix C: Questionnaire
Name:
Organization:
Designation:
Questionnaire
1. How is Africa looked at as an Investment option in terms of ROI in the telecom

sector?
a. Good Prospect
b. Medium
c. Insignificant
2. Does Africa seem open to Private Equity Investments?
a. Yes
b. No
3. What is the risk level involved with investments in Africa?
a. Very High
b. Medium
c. Low
4. What kind of risks is involved from among the following? Please rank them in order
of priority.
a. Political Instability___
b. Unfriendly Regulations___
c. Expropriation Without Refund___
d. Corruption___
e. Unskilled Labour___
If any other please specify: ____________________________________

5. From telecom investor‟s viewpoint, please rate the following in the order of
importance :
a. GDP ___
b. Population ___
c. Inflation ___
d. FDI Inflows ___
e. Telecom Penetration ___
f. Political and Regulatory Environment ___
6. Which of the following regions in Africa are lucrative in ROI terms?
a. North Africa
b. South Africa
c. Sub Saharan Africa
7. From the Sub Saharan countries which of the following are lucrative investment?
(please choose multiple, if needed)
a. Kenya
b. Nigeria
c. Ghana
d. Dominic Republic, Congo
e. Sudan
f. Eritrea
g. Somalia
h. All the above
i. None of the above
8. Which are the countries that invest heavily in Africa telecom?
Response: ___________________________________________________
_____________________________________________________________
9. How is Sub-Saharan Africa looked at in terms of telecom liberalization?
a. Liberal
b. Conservative
10. How would the telecom industry in Africa look 4 years down the line in terms of
investment?
a. High Margin , High Risk

b. High Margin , Low Risk
c. Low Margin , Low Risk
d. Low Margin , High Risk
11. What is the perception of an UAE investor about African Telecom Sector?
Response: ___________________________________________________
_____________________________________________________________
Appendix D: Market players in different countries
Telecom Operator Primary Activity Website

Algeria . .
Algérie Telecom Fixed www.algerietelecom.dz
Algérie Telecom Mobile www.mobilis.dz
Orascom Telecom Algérie Mobile www.otelecom.com
Wataniya Telecom Algerie Mobile www.nedjma.dz/watweb
Angola . .
Angola Telecom Mobile www.moviecel.net
Angola Telecom Mobile www.angolatelecom.com
Angola Telecom Fixed www.angolatelecom.com
Jembas Assistência Técnica Lda. VSAT .
Mercury Serviços de
Telecomunicações Sarl. VSAT www.mstelecom.com
MultiTel Serviços de
Telecomunicações Lda. VSAT/ISP www.multitel.co.ao
Unitel Mobile www.unitel.co.ao
Wezacom VSAT .
Benin . .
Areeba Mobile www.areeba.com.bj
Bell Benin Communications Mobile www.bellbenin.bj
Benin Telecoms Fixed www.benintelecoms.bj
Commodity Corporation Mobile www.libercom.bj
Spacetel-Benin Mobile www.spacetelbenin.com
Télécel Benin Mobile www.telecel-benin.com
Botswana . .
Botswana Telecommunications
Corp. Fixed www.btc.bw
Mascom Wireless Mobile www.mascom.bw
Orange Botswana (ex-Vista
Wireless) Mobile www.orange.co.bw
Burkina Faso . .
Celtel Burkina Mobile www.bf.celtel.com
Onatel (Office National des
Télécommunications) Mobile http://www.telmob.bf/
Onatel (Office National des
Télécommunications) Fixed www.onatel.bf/pageshtml/accueil.htm
Telecel Faso Mobile http://www.telecelfaso.bf
Burundi . .
Africell S.A. Mobile www.africell.bi/index_en.htm
Office National des
Télécommunications Mobile .
Spacetel Burundi S.A. Mobile www.spacetel.bi/
Telecel-Burundi Mobile www.stcellular.bi
Cameroon . .
Cameroon Telecommunications
Corporation Fixed www.camnet.cm
Camtel Mobile www.camtel.cm
MTN Cameroon Mobile www.mtncameroon.net/
Societe Camerounaise de Mobiles

(SCM). Mobile www.orange.cm
Cape Verde . .
Cabo Verde Telecom Mobile www.nave.cv/cvtelecom
Central African Republic . .
A-Cell Mobile www.acell-rca.net
NationLink Telecom RCA Mobile .
Société Centrafricaine des
Télécommunications Fixed .
Telecel Centrafrique
Orsacom Mobile www.telecel.com
Chad . .
Sotel Chad Fixed www.sotel.td
Celtel Tchad Mobile www.td.celtel.com/fr/index.html
Millicom Chad Mobile www.millicom.com/index4.htm
Comoros . .
Comoros Telecom Fixed ww.comorestelecom.km/
Huri Mobile .
Congo . .
MSI Cellular Investments Mobile www.cg.celtel.com/fr/index.html
Orascom Telecom Mobile .
Société des Télécommunications
du Congo S.A.U Fixed .
Cote d'Ivoire . .
Côte d'Ivoire Télécom Fixed www.citelecom.ci
MTN Cote d'Ivoire (was Loteny) Mobile www.telecel.ci
Orange Côte d'Ivoire S.A (was
SIM) Mobile www.orange.ci
Democratic Republic of the
Congo . .
Celtel Congo Mobile www.cd.celtel.com/fr/index.html
Congo Chine Telecom Mobile .
Congolese Wireless Network sprl Mobile www.africanwireless.com
Office Congolais des Postes et
Télécommunications Fixed .
S.A.I.T. Télécom Mobile .
SuperCell Mobile .
Dijbouti . .
Djibouti Télécom S.A. Mobile www.djibouti-telecom.dj
Equatorial Guinea . .
Guinea Ecuatorial de
Telecomunicaciones S.A. Mobile .
Eritrea . .
Eritrea Telecommunications
Services Corp. (Eritel) Mobile .
Telecommunication Service of
Eritrea Fixed .
Ethiopia . .
Ethiopian Telecoms Authority Mobile www.telecom.net.et
www.telecom.net.et
Ethiopian Telecoms Authority Fixed
Gabon . .
Celtel Gabon SA Mobile www.ga.celtel.com/fr/index.html

Gabon Telecom Fixed www.gabontelecom.ga
Libertis S.A. Mobile .
Telecel Gabon Mobile www.telecel.co.ga
Gambia, The . .
Africell Gambia Ltd. Mobile www.africell.gm
Gambia Telecommunications
Company Ltd. Mobile www.gamtel.gm
Gambia Telecommunications
Company Ltd. (Gamtel) Fixed .
Ghana . .
Ghana Telecom Mobile www.onetouch.com.gh
Ghana Telecommunications
Company Fixed www.ghanatelecom.com.gh
Kasapa Mobile .
Millicom Ghana Mobile .
ScanCom Ltd. - Areeba Mobile www.spacefon.com
Guinea Republic . .
Intercel Guinée Mobile .
Investcom Mobile .
de Guinée Mobile .
Guinea-Bissau . .
Ministry of Telecommunications Regulator www.icgb.org
Guinetel Mobile www.gtelecom.gw
Spacetel Guinee-Bissau SA Mobile .
Kenya . .
Celtel Mobile www.ke.celtel.com/en/index.html
Safaricom Mobile www.safaricom.co.ke
Telkom Kenya Limited Fixed www.telkom.co.ke
Lesotho . .
Econet - Ezi-Cel (Pty) Ltd. Mobile www.econetwireless.com
Tele-Com Lesotho (Pty) Ltd. Fixed www.telecom.co.ls
Vodacom Lesotho Pty. Mobile www.vodacom.co.ls
Liberia . .
Atlantic Wireless (Liberia) Inc Mobile www.libercell.info
Celcom Telecommunications Inc Mobile www.cellcomgsm.com
Comium Services BVI (Liberia) Mobile www.comium.com.lr
Lonestar Cell Mobile www.lonestarcell.com
Libya . .
Al Madar Telecom Company Mobile www.almadar.ly
General Post &
Telecommunication Company Fixed .
Libyana Mobile Phone Mobile www.libyana.ly
Madagascar . .
Madacom SA Mobile www.madacom.com
Orange Madagascar Mobile www.orange.mg
Telecom Malagasy S.A. Fixed www.telma.net
Malawi . .
CelTel Malawi Limited Mobile www.mw.celtel.com/en/index.html

Malawi Telecommunications
Limited Fixed www.mtlonline.net
Telekom Networks Malawi
Limited Mobile www.telekommalawi.com
Mali . .
Ikatel S.A. Mobile www.ikatel.net
www.mali.viky.com/sotelma/cgi-
Sotel Fixed bin/index.pl
Malitel S.A. Mobile .
Mauritania . .
Mauritano-Tunisienne des
Télécommunications Mobile www.mattel.mr
Société Mauritanienne des
Télécommunications Mobile www.mauritel.mr
Mauritius . .
Emtel Ltd. Mobile www.emtel-ltd.com
Emtel Ltd. Mobile .
Mauritius Telecom Ltd. Fixed www.mauritiustelecom.com
Mauritius Telecom/Cellplus
Mobile Communications Ltd. Mobile www.cellplus.mu
Morocco . .
Maroc Telecom Fixed www.iam.net.ma
Itissalat Al-Maghrib S.A Mobile www.onpt.net.ma
Medi Telecom Mobile www.meditelecom.ma
Office National des Postes et
Telecom. Fixed .
Mozambique . .
Telecomunicações de
Moçambique E.E. Fixed www.tdm.mz
Telecomunicações Móveis de
Moçambique, Lda. Mobile www.mcel.co.mz
VM SARL Mobile .
Vodacom Mobile www.vodacom.co.mz
Namibia . .
Mobile Telecommunications Co.
Ltd. Mobile www.mtc.com.na
Telecom Namibia Ltd. Fixed www.telecom.na
Niger . .
Sontel Fixed www.intnet.ne
Celtel Niger Mobile www.ne.celtel.com/fr/index.html
Sahel-Com Mobile .
Telecel-Niger S.A. Mobile .
Nigeria . .
Globacom Ltd Mobile www.gloworld.com
MTN Nigeria Ltd. Mobile www.mtnonline.com
Nigeria Mobile
Telecommunicarions Limited Mobile www.mtelnigeria.com/
Nigeria Mobile
Telecommunicarions Limited Mobile .
Celtel Mobile www.ng.celtel.com
Reunion . .
France Caraibe Mobiles Mobile .
Societe Francaise du
Radiotelephon Mobile www.srr.fr/
Rwanda . .
MTN RwandaCell s.a.r.l Mobile www.mtnrwandacell.co.rw
RwandaTel S.A. Fixed www.rwandatel.rw
Terracom Mobile www.terracom.rw
Sao Tome and Principe . .
Companhia Santomense de
Telecomunicações s.a.r.l. Mobile www.cstome.net
Senegal . .
SenTel GSM Mobile www.sentelnet.com
Société Nationale des
Télécommunications du Sénégal Mobile www.sonatel.sn
Tigo - Accueil Mobile www.tigo.sn
Seychelles . .
Air Tel Seychelles Mobile www.airtel.sc
Cable & Wireless (Seychelles)
Ltd. Mobile www.cw.com/seychelles/
Sierra Leone . .
Celtel Sierra Leone Ltd. Mobile www.sl.celtel.com/en/index.html
Comium Sierra Leone INC Mobile www.comium.com.sl
Datatel GSM Mobile .
Millicom Sierra Leone Ltd. Mobile www.buzzsl.com
Sierra Leone Telecommunications
Company Fixed .
Somalia . .
Hormuud Telecom Somalia Inc Mobile www.hortel.net
Nation Link Somalia Inc. Mobile www.nationlinktelecom.com/
SOMAFONE FZ LLC Mobile www.somafone.com
STC Mobile .
Telecom Somalia Mobile www.telcom-somalia.com/
Telesom Mobile Somalia Mobile www.telesom.net
South Africa . .
Cell C (Pty) Ltd Mobile www.cellc.net
Mobile Telephone Networks Mobile www.mtn.co.za
Mobile Telephone Networks Mobile www.mtn.co.za
Telkom S.A. Ltd. Fixed www.telkom.co.za
Virgin Mobile South Africa MVNO www.virginmobile.co.za
Vodacom (Pty) Ltd. Mobile www.vodacom.co.za
Vodacom (Pty) Ltd. Mobile www.vodacom.co.za
Sudan . .
Bashair Telecom Co Ltd Mobile www.areeba.com.sd
Bashair Telecom Co Ltd Mobile www.areeba.com.sd
Sudan Mobile Telephone
Company Mobile www.sdn-mobitel.com
www.sudatel.net`
Sudan Telecommunication
Corporation Fixed
Swaziland . .
MTN Swaziland Mobile www.mtn.co.za
Swaziland Posts and
Telecommunications Corporation Fixed www.sptc.co.sz
Tanzania . .
MIC Tanzania Ltd. Mobile www.mobitel.co.tz
MIC Tanzania Ltd. Mobile www.mobitel.co.tz
Tanzania Telecommunications
Company Ltd. Mobile www.tz.celtel.com/en/index.html
Tanzania Telecommunications
Company Ltd. Fixed www.ttcl.co.tz/
Vodacom Tanzania Mobile www.vodacom.co.tz
Zanzibar Telecom Mobile .
Togo . .
du Togo Fixed www.togotel.net.tg
Telecel Togo SA Mobile www.telecel.tg
Togo Cellulaire Mobile www.togocel.tg
Tunisia . .
Orascom Tunisie Telecom Mobile www.tunisiana.com
Télécommunications Fixed www.tunisietelecom.tn
Uganda . .
Clovergem Celtel Ltd. Mobile www.ug.celtel.com/en/index.html
MTN Uganda Mobile www.mtn.co.ug
Uganda Telecom Limited Fixed www.utl.co.ug
UTL Telecel Mobile www.utl.co.ug/telecel
Uganda Communications
Commission Regulator www.ucc.co.ug/
Zambia . .
Celtel Zambia Ltd. Mobile www.zm.celtel.com/en/index.html
Telecel-Zambia (Zamcell) Mobile www.telecel.co.zm
Zambia Telecommunications
Company Limited Fixed www.zamtel.zm
Zamtel Mobile www.zamtel.zm
Zimbabwe . .
Econet Wireless Mobile www.econet.co.zw
Net.One Mobile www.netone.co.zw
Telecel Zimbabwe (PVT) Ltd Mobile www.telecel.co.zw
TelOne Mobile www.telone.co.zw/
Zimbabwe Posts &
Telecommunications Corporation
(Zimbabwe PTC) Fixed .
Appendix E: List of countries in North Africa and Sub Saharan Africa
List of North African Countries
Algeria
Egypt
Libya
Morocco
Tunisia
List of Sub – Saharan Countries
Congo Kenya SAO TOME AND PRINCIPE

COTE D'IVOIRE Lesotho Senegal
Congo, Dem. Rep. Liberia Seychelles
Djibouti Madagascar Sierra Leone
EQUATORIAL GUINEA Malawi Somalia
Eritrea Mali Sudan
Ethiopia Mauritania Swaziland
Gabon Mauritius Tanzania
Mozambique
Gambia Togo
Ghana Namibia Uganda
Guinea Niger Yemen
Guinea-Bissau Rwanda Zambia
Zimbabwe
Appendix F: SAMENA Council
Established: April, 2006

Headquartered Dubai, United Arab Emirates
With a network of members that extends beyond continental borders, SAMENA

Telecommunications Council, a multi-continent telecom consortium, aims to be the ultimate
promoter of telecom innovations in its member regions and a facilitator for collaboration and
knowledge-sharing between regional telecom entities. Such collaboration and knowledge-
sharing between operators, vendors, manufacturers, entrepreneurs, educators, R&D experts,
and regulators, aids effective resolutions to technical, economical, and legal issues in regions
where tough economical and regulatory environments prevail.
List of Tables/ List of Exhibits

Figure 1- Private equity business Model
Figure 2- Brief Methodology
Figure 3- Snapshot of the spreadsheet
Figure 4- Quantitative and Qualitative Classification of the methods
Figure 5- Snapshot of countries from Method 1
Figure 6- Snapshot of Countries from Method 2
Figure 7- Snapshot of Countries from Primary research
Figure 8- Snapshot of final list of countries
Figure 9- Possible Drivers in the Future
Figure 10- Egypt Mobile market Players
Figure 11- Mobinil Revenue growth
Figure 12-Algeria Competitive landscape
Figure 13- Djezzy revenue growth
Figure 14- Morocco's ten economic freedoms
Figure 15- Morocco Competitive landscape
Figure 16- Maroc Telecom Revenues
Figure 17- Tunisia Competitive Landscape
Figure 18- Tunisiana Revenue growth
Figure 19- Millicom Revenue growth
Figure 20- Kenya Competitive Landscape
Figure 21- Safaricom revenue growth
Figure 22- Nigeria Competitive landscape

Figure 23- MTN revenue growth
Figure 24- Zambia-Celtel Revenue growth
Figure 25-Tanzania competitive landscape
Figure 26- Vodacom Revenue growth
Figure 27- Mobile Market Share of Pakistan
Figure 28- Trend Analysis between GDP and telecom revenue growth
Figure 29- Telecom Penetration Comparison
Table 1 - Data sources
Table 2 - Parameters List
Table 3 - Parameters Ranking List
Table 4 - Scores of the Countries
Table 5 - List of North African countries
Table 6 - List of Sub Saharan Countries
Table 7 - Output List for Method - II
Table 8 - Economic Snapshot North Africa
Table 9 - Penetration Overview
Table 10- Economic snapshot Sub Saharan Africa
Table 11- Penetration Overview Sub Saharan
Table 12 Correlation between GDP and telecom revenue growth

GLOSSARY
SAMENA - South Asia, Middle East and North Africa Telecommunications Council
DRC - Democratic Republic Of Congo
PE - Private Equity
UAE - United Arab Emirates
GDP - Gross Demostic Product
SAVCA - South African Venture Capitalist & Private Equity Association

FDI - Foreign Direct Investments
ICT - Information and Communications Technology
ITU - International Telecommunications Union
MVNO - Mobile Virtual Network Operator
VSAT - Very Small Aperture Terminal
GSM - Global System For Mobile Communications
CAGR - Compounded Annual Growth Rate
IFC - International Finance Corporation
IFRS - International Financial Reporting Standards
OECD - Organisation For Economic Co-operation and Development
COMESA - Common Market For Eastern and Southern Africa
IAS - International Accounting Standards
EAC - East African Community
CCK - The Communication Commission of Kenya

DBSA - Development Bank Of Southern Africa
ISP - Internet Service Provider
TCRA - Tanzania Communication Regulatory Authority
HIP - Heavily INdebted Poor
IMF - International Monetary Fund
TDB - Technology Development Board
WLL - Wireless Local Loop
MEA - Middle East and Africa
M&A - Mergers and Aquistion
IP - Internet Protocol
NGN - Next Generation Networking

BIBLIOGRAPHY
 Articles from AltAssets http://www.altassets.com/index.php
 Articles from ITU http://www.itu.int/net/home/index.aspx
 Research by NMC Communication http://www.nmscommunications.com
 World Bank Data http://web.worldbank.org
 Economist http://www.economist.com
 MTN http://annualreport.mtn.com
 Telegeogrphy http://www.telegeography.com
 Pakistan Telecommunication Authority website
 Bloomberg Terminal at SP Jain Center of Management , Dubai Campus
Reports:
 Morgan Stanley Report

AlCazar Capital Partners - Africa Telecom Report

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Feasibility Study: Private Equity

Investment Opportunities in the African

AlCazar Capital Partners, Dubai-UAE

S.P. Jain Center of Management

Date: November 18, 2007

Date: November 18, 2007

APURVA CHIRANEWALA (GMBA07E087)

MANOJ BALAJI (GMBA07H125)

MONITA ANAND (GMBA07A117)

SUNITHA SURESH (GMBA07A141)

AlCazar Capital Partners is a private equity firm focused in investments in emerging

North Africa – Algeria, Egypt, Morocco and Tunisia

Sub Sahara – Ghana, Mozambique, Kenya, Nigeria, Tanzania and Zambia

EXECUTIVE SUMMARY ..................................................................................................... 5

TABLE OF CONTENTS ........................................................................................................ 7

1.1 BACKGROUND OF THE RESEARCH/ STUDY ......................................................... 9

1.2 INFORMATION ABOUT THE ORGANIZATION: .................................................... 11

1.3 NEED FOR THE STUDY ............................................................................................. 11

1.5 SCOPE OF THE PROJECT........................................................................................... 12

1.6 BRIEF METHODOLOGY ............................................................................................ 12

1.7 LIMITATIONS .............................................................................................................. 13

2.0 RESEARCH METHODOLOGY: ............................................................................. 14

2.1 RESEARCH OBJECTIVE ............................................................................................. 14

2.2 RESEARCH DESIGN ................................................................................................... 14

2.3 DATA COLLECTION ................................................................................................... 15

2.3.1 DATA COLLECTION SOURCES ......................................................................... 15

2.3.2DATA COLLECTION METHODS ......................................................................... 15

2.4 DATA ANALYSIS ........................................................................................................ 18

2.4.1DATA ANALYSIS TOOLS: ................................................................................... 20

2.5 QUALITATIVE METHOD I & II ................................................................................. 25

3.0 FINDING AND ANALYSIS ........................................................................................... 25

3.1 METHOD I .................................................................................................................... 26

3.2 METHOD 2 .................................................................................................................... 27

3.3 PRIMARY RESEARCH ................................................................................................ 30

3.4 FINAL LIST OF COUNTRIES ..................................................................................... 34

3.4.1 NORTH AFRICA .................................................................................................... 36

3.4.2 SUB SAHARAN AFRICA......................................................................................49

3.4.2.1 GOOD PROSPECTS.......................................................................................49

3.4.2.2 FUTURE POSSIBLE DRIVERS.....................................................................61

3.4.3.1 PAKISTAN : BENCHMARK COUNTRY.....................................................63

3.5 INVESTORS PERCEPTIONS ...................................................................................... 66

3.6 MERGERS AND ACQUISITIONS..............................................................................67

LIST OF TABLES/ LIST OF EXHIBITS ........................................................................... 90

1.1 Background of the research/ study

– Expand operations through capital investment

– Develop new products and technologies

– Resolve ownership and management issues

– High minimum rates of return – 25% - 35%.

– Excellent industry reputation.

– Ability to meet specified operational milestones.

Most recently, following years of mismanagement by state-owned monopolies,

1.2 Information about the organization:

1.3 Need for the study

1.5 Scope of the project

a) Study and analysis of telecom opportunities in African countries.

b) The study would include the following:

i) Economic and Political Indicators

ii) Regulations and Liberalization

iii) Telecom Indicators

iv) Competitive Landscape

1.6 Brief methodology

 Lack of first hand accessibility to African market: Since it wasn‟t feasible to go to

2.0 Research Methodology: