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Summary

The recent regulatory approvals for the acquisition of Neotel and Raha by Liquid Telecom are propelling the operator’s pan-African connectivity strategy, under which it is expanding its operations across high-growth markets in the region. Liquid Telecom plans to use the acquisitions to enhance its service offerings in the retail, enterprise, and wholesale segments.

Acquisitions in line with Liquid Telecom’s strategy to venture into high-growth markets

Liquid Telecom has recently received regulatory approval to acquire South African network operator Neotel for ZAR6.55bn ($467m) and Raha, a leading ISP in Tanzania, for an undisclosed amount. The two acquisitions follow the recent establishment of a joint venture by the company with Botswana Power Corporation (BPC) and the formation of Liquid Telecom Botswana to advance fiber network rollout in the country.

The acquisitions add to Liquid Telecom’s footprint, which spans 12 countries in Eastern, Central, and Southern Africa, with a network of over 40,000km comprising of cross-border, metro, and access fiber networks. The expanded footprint gives Liquid a competitive advantage as the region’s largest pan-African fiber network and B2B communications services provider.

Liquid Telecom’s increased M&A activity is in line with its diversification strategy to expand its footprint across sub-Saharan African and invest in high-growth sectors of enterprise and wholesale. The regional broadband market is still in its infancy and is one of the sectors poised to record high growth in the future.

Liquid Telecom will also benefit from the existing infrastructure and expertise of the two firms that it has acquired. It will have access to Neotel’s spectrum and its two tier-3 data centers that will enable it offer advanced services such as public and private cloud services in southern Africa. In addition, it will leverage Raha’s existing WiMAX and Wi-Fi network infrastructure in Tanzania to enhance the recently launched Hai retail brand.

Appendix

Further reading

Africa Market Outlook, 4Q16, TE0015-000410 (October 2016)

“African enterprises will gain from Liquid Telecom’s Neotel acquisition,” TE0018-000004 (July 2016)

Author

Danson Njue, Research Analyst, MEA

danson.njue@ovum.com

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