Heavy investments forecast in the connectivity market

Workers lay fibre optic cables in Nairobi. FILE 

By MBUGUA NJIHIA

Posted  Wednesday, September 25   2013 at  18:40

Dimension Data acquires Access Kenya while Kenya Data Network ends their losing streak with deep pockets from Liquid Telcom—an excellent exit for the Somen’s and KDN shareholders right?

Yes, but to the keen eye, the story goes deeper when your pulse is on the future of tech and service delivery on the African continent often referred to as the next frontier for any high growth business.

In 2010 the Japanese giant NTT — Nippon Telegraph and Telephone Corp bought South African IT firm Dimension Data for $3.2 billion looking to consolidate its emerging market footprint.

Could Dimension Data with its reported operating revenues in 2012 of $ 5.84 billion act as a conduit for NTT DoCoMo, a subsidiary of NTT Holdings, to market entry into the mobile segment having had vast experience on the mobile data service front?

The Japanese consumer had latched on to technologies synonymous with mobile data much earlier than the rest of the world.

Liquid Telecom who have built Africa’s largest single fibre network bought 80 per cent into KDN having off-loaded 60 per cent from South Africa-based Altech and 20 per cent from Naushad Merali.

Liquid Telecom forms part of the Econet Wireless diversified portfolio under the watch of one Strive Masiyiwa, who made a successful bid for a local telco licence in 2004 and whose setup later fell through.

Safaricom with Sh10 billion earmarked and already in use in the extended rollout of their own fibre network over the next few years have the opportunity clearly in their radar. Jamii Telecoms have also intensified their rural Kenya rollout though certain areas of their capital city deployment had been bogged down by a court case.

These two must be careful not to roll out dump fibre as consumers will soon demand to pay less for the pipe but will pay more for what flows through it, a thing that Wananchi Group through Zuku are capitalising on.

This has seen them invest heavily in growing their content portfolio with the lock out on English Premier League ( EPL) content still standing. Our biggest bottleneck in the coming to market of innovative services and technology has been and still is the banking sector.

Their low appetite to measured risk as guided by a well-defended excel sheet still makes it difficult to use them to structure and finance the multi-million-dollar deals that will power the coming wave of innovative services riding on quality infrastructure.

As the long game by these well-funded outfits becomes apparent, we will see local banks angling for a piece, with the very real possibility of missing the bus.

The next 24 months for me heralds the birth of entrepreneurs who will make bank leveraging the coming infrastructure and market creation boom that will follow the expected heavy investments in the connectivity and content space.