IHS: Africa's mobile markets to see more M&A in 2016

IHS Technology predicted that mobile markets in Africa will see further mergers and acquisitions in 2016 as existing operators look to cut costs and expand their market presence.

In its latest insight report on the African telecoms market that was emailed to FierceWireless:Europe, the research company noted that some African mobile markets are slowly approaching maturity with decelerating revenues and subscriber growth, and will see rising M&A activity in line with trends seen in more developed markets.

Consolidation is seen as particularly likely to take place in countries with four or more operators, such as Ivory Coast, Uganda and Tanzania.

"As some of the continent's international players (such as Bharti Airtel and Etisalat) continue to face revenue pressures, capex and opex demands, they will pursue more consolidating activities in untapped markets and exit markets that they predict will give a negative return on invested capital (ROIC)," the company said.

In other predictions, IHS Technology also said it expects to see new partnerships that will help drive Internet connectivity in more rural communities, noting that companies such as Facebook, Google and SpaceX are already "racing towards bridging the gap for rural communities."

"Facebook, through its internet.org initiative, has shown that rural Africa is a crucial part of getting the 'next billion' online," the research company said.

It also expects to see similar partnerships to that between satellite operator SES and Internet provider Intersat to "facilitate the delivery of internet connectivity to remote and isolated areas" across the African continent.

IHS Technology also predicts there will be an increase in bilateral roaming agreements within the Southern African Development Community (SADC) and the East African Community (EAC) to help reduce mobile roaming charges among member states.

As for mobile money, which has been a success story in East Africa, IHS Technology expects to see stronger partnerships between operators and the financial services industry.

"We expect 2016 to bring about even more prevalent horizontal (operator-to-operator within countries) and vertical (multi-industry) collaboration," the company said. "We also expect the uptake in cross-border payments to continue, with regional operators in East and Southern Africa collaborating to enhance their mobile money presence."

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