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Africa Defeats World’s Biggest Mobile Carriers

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Telecommunications
  • Africa Defeats World’s Biggest Mobile Carriers

Back when African countries were auctioning off mobile licenses by the boatload to serve the region’s young, tech-savvy population, investing in the continent’s fast-growing economies seemed like a no-brainer. Some of the world’s biggest wireless carriers rushed in.

Now they’re wondering if they made a mistake. Increasing government and regulatory scrutiny, as well as a lack of expansion opportunities in sub-Saharan Africa, are making it harder for operators such as Vodafone Group Plc, Orange SA and Bharti Airtel Ltd. to grow. Their choice: Pull back or double down.

Two companies beating at least a partial retreat are Millicom International Cellular SA, which disposed of its Senegal and Democratic Republic of Congo units, and India’s Airtel, which sold businesses in Burkina Faso and Sierra Leone to Orange earlier this year. Reducing its exposure to Kenya, Vodafone transferred most of its $3.6 billion stake in Nairobi-based Safaricom Ltd. to majority-owned South African unit Vodacom Group Ltd. in May, and may pare further. That leaves Vodafone Ghana as the U.K. company’s sole own-branded African operation.

“At this point it is becoming clear who has a chance of making it in Africa and who does not, and it essentially boils down to scale, as well as government sway,” said Baha Makarem, an analyst at Arqaam Capital. “It’s just a question of who is ready to weather the storm.”

The shift in sentiment comes as governments across sub-Saharan Africa are losing favor with investors. The fall in commodity prices has reduced tax revenue in many countries, and average economic growth slumped to 1.4 percent last year from 3.4 percent in 2015, according to the International Monetary Fund. That’s encouraged lawmakers in countries including Tanzania and Ghana to look to international companies for revenue opportunities—both have ordered foreign wireless carriers to cede shares to local investors.

“The regulatory challenges are top of our mind at all times,” MTN Group Ltd. Chairman Phuthuma Nhleko told shareholders at the annual meeting of Africa’s biggest wireless carrier on May 25. “It’s just part of the environment in which we operate.”

Nhleko has firsthand experience with that. A Nigerian watchdog fined the carrier $5.2 billion in 2015 for missing a deadline to disconnect unregistered subscribers, leading to a slump in the share price that’s yet to turn around. The penalty was reduced to $1 billion after months of negotiations and Nhleko has since overhauled management and corporate governance. Even so, MTN was fined $8.5 million in Rwanda in May for non-compliance with its license obligations. The company hasn’t yet delivered on a promise to list its Nigerian unit in Lagos.

Vodacom, 70 percent owned by Vodafone, has complied with Tanzania’s demand to sell shares on the Dar es Salaam stock exchange. It had to delay the listing when a surge in demand from retail investors slowed the processing of applications from outside the country.

IPOs are the only way to force the wireless carriers to share their profits with local investors in the East African country, Tanzanian President John Magufuli said last month, adding that licenses could be withdrawn if they refuse the order.

“It is not enough to just subject the mobile-phone companies to fines and allow them to continue minting billions of money in profits,” the local Daily News quoted him as saying.

Not everyone is down on Africa, where GSMA Intelligence expects mobile revenue will reach $43 billion in 2020. Orange, France’s market leader, in February called Africa a priority region and has focused most of its investment in French-speaking markets such as Cameroon and Ivory Coast.
That’s partly to offset stagnating growth in Europe and to take advantage of a younger population demanding faster and cheaper data, according to Bruno Mettling, the Paris-based company’s head of operations on the continent. A lack of obsolete infrastructure that would need to be removed or upgraded is also underlying the business case, he said.

Some operators “are withdrawing from Africa in the face of the enormous investments to be made—3G, 4G, but also in the fiber to connect the antennas to each other,” Mettling said. “At Orange, we invest an average of 1 billion euros ($1.1 billion) in Africa each year.”

Areas of expansion for Orange include mobile banking, where Nairobi-based Safaricom blazed a trail with its M-Pesa product in Kenya. Orange Money reported a 74 percent increase in customers, to more than 30 million, in the first quarter, and plans to extend the service into its home market this year. Orange’s francophone markets have so far stopped short of ordering share sales to local investors.

Vodacom, based in Johannesburg, is another considering further expansion following the Safaricom deal. The tougher market and increasing willingness of some rivals to sell may have brought down prices, Chief Executive Officer Shameel Joosub said at the company’s results presentation in May.

“The days of you going in with a new greenfield license are gone,” Joosub said. The price of potential acquisition targets is, however, “becoming more reasonable,” and there “are not that many buyers.”

The first wave of second-generation digital mobile licenses in Africa started in the late 1990s, with Nigeria being one of the last countries to issue its first permit in 2001. While those markets have since been growing—more than half the continent’s population is seen owning a smartphone by 2020—the only country yet to auction licenses is Ethiopia.

“Africa is a market of growth, but also a very difficult environment to operate,” said Dobek Pater, managing director of Pretoria-based Africa Analysis. “Costs of operation are often high, disposable income levels of large segments of the society low, and the regulatory environment not always predictable. Only companies with “increasing economies of scale will succeed.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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WeChat Brand Worth $68B, More than Three Major Chinese Banks

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WeChat

As the leading social networking app in China and the fifth most widely used globally, WeChat saw impressive growth amid the COVID-19 pandemic, both in revenue and the number of users. The brand value of Tencent Holding’s mobile messaging app also surged in the last year, launching WeChat among the strongest brands globally.

According to data presented by StockApps.com, WeChat brand value hit almost $68bn in 2021, more than three major Chinese banks.

The World’s Strongest Brand

WeChat or also called China’s “app for everything,” offers services from messaging and banking to taxi services and online shopping. During the pandemic, the app also helped keep track of those traveling or in quarantine, providing access to real-time data on COVID-19, online consultations, and self-diagnosis services powered by artificial intelligence to more than 300 million users.

This diversity of services offered to its users, especially amid the pandemic, helped the WeChat brand value surge by 25% YoY, revealed the 2021 Brand Finance’s Global 500 survey. With a valuation of $67.8bn, WeChat jumped nine spots on the ranking to enter the top 10 for the first time, behind giants like Apple, Amazon, Google, Walmart, or Facebook.

Also, the popular app ranked higher than the three major banks in China. In comparison, China Construction Bank hit a $59.6bn brand value this year, $8.3bn less than WeChat. Agricultural Bank of China and Bank of China also ranked below the popular messaging app, with $53.1bn and $48.6bn value, respectively.

The Brand Finance survey also revealed WeChat overtook Ferrari to become the world’s strongest brand with a top score of 95.4 out of 100 and an AAA+ brand strength rating. The relative strength of brands is measured through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity and business performance.

Statistics show the Chinese mobile app is one of merely 11 brands in the ranking to have been awarded the elite AAA+ brand strength rating.

More than Hit 1.2 Billion Active Monthly Users

WeChat has lots of popular messaging app features, including Moments. A majority of WeChat users access WeChat Moments every time they open the app. Voice and text messaging, group messaging, payment and games are other examples of WeChat services.

Tencent’s 2020 financial results revealed the number of WeChat active accounts has been multiplying over the past years.

Between 2011 and 2015, the number of monthly active accounts surged from 2.8 million to nearly 700 million. In the first quarter of 2018, WeChat`s user base hit the one-billion benchmark, and the number just kept rising.

Statistics show the popular social networking app had over 1.2 billion monthly active users in the last quarter of 2020, ranking as the fifth most widely used social networking app globally.

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Migration to IPv6 Will Enhance Digital Economy, Says Pantami

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digital economy

The Minister of Communications and Digital Economy, Dr. Isa Ibrahim Pantami, has stressed the need for Nigerians to migrate from the use of Internet Protocol version four (IPv4) address system to Internet Protocol version six (IPv6), in order to diversify Nigeria’s economy and prepare it for a digital economy transformation.

The Minister who spoke as a special guest of honour at a recent webinar on the state of IPv6 deployment in Nigeria, organised by the IPv6 Council Nigeria, in collaboration with the Association of Telecoms Companies of Nigeria (ATCON), said there was need for migration from IPv4 to IPv6, saying IPv4 was fast depleting in numbers, while the population of internet users in Nigeria is on the rise.

Internet Protocol (IP) addresses are assigned numbers on the internet, which are part of the underlying infrastructure of the internet. The former IP version four, which Nigerians are connected to, is fast depleting and the world is fast migrating to a newer version known as version six (IPv6).

The Minister who was represented by the Managing Director of Galaxy Backbone, Prof. Muhammed Abubakar, said the conference on IPv6 came at a right time, when the federal government was focusing on economic diversification to drive the country’s national digital economy policy for a digital Nigeria and the Nigerian National Broadband Plan (NNBP 2020-2025).

“IPv6 is an important ingredient of our National Digital Economy Policy and the Nigerian National Broadband Plan.

“The current Internet Protocol that Nigeria has, which is driving the use of internet, is the IPv4, which has a combined capacity of about four billion addresses, and it is already reaching its capacity limit, which calls for the need to migrate to IPv6, with larger capacities.

“The increase in the adoption rate of IPv6 will require the creation of policies and regulatory instrument that will encourage and drive its adoption.

“So the federal government is putting regulatory instrument in place in line with the developmental regulation pillar of the National Digital Economy Policy. This will serve as a guide for both the public and private sectors to drive adoption of IPv6,” Pantami said.

One of the keynote speakers, CEO, MainOne Broadband Company, Ms. Funke Opeke, said Nigeria’s presence on the internet had been low even in the days of IPv4, adding that it calls for growth and increased access to the internet, being a critical foundation of Nigeria’s broadband plan.

“One of the key ways to achieve Nigeria’s broadband target is to leverage IPv6. It is not possible to connect Nigeria ‘s large population of over 206 million people without IPv6 adoption. With IPv6, we can connect people, networks and devices.,” Opeke said.

President of ATCON, Ikechukwu Nnamani, in his welcome speech, said with the projection that by 2030, more than125 billion devices would be connected using Internet of Things (IoTs), which would put about 15 connected devices into the hands of each consumer, all the devices would therefore need a unique IP address to function efficiently.

“The world has run out of IPV4, the initial IP addressing system. AFRINIC the only regional body in Africa that still has some IPV4 for allocation, recently indicated it has less than 1.8 million IPV4 available. The migration to IPV6 is therefore not optional at this point.

“ATCON being a very proactive Association saw the need to train network engineers in Nigeria in order to be able to migrate from IPV4 to IPV6 several years ago and this led ATCON hosting international training on IPv6 with the support of some of its members. This training was done in conjunction with AFRINIC,” Nnamani said.

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Specta Records N100bn Consumer Lending Milestone

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Online instant lending platform, Specta and PaywithSpecta, a digital credit solution introduced by Sterling Bank has disclosed that it has disbursed over N100 billion in digital loans and about N5 billion digital credits, respectively.

Both solutions make loans and digital credits available in less than five minutes to banked Nigerians, irrespective of their bank, without paperwork and collateral.

But above all, they are also the best in the segment for providing the best lending rates and interest free funding up to 90 days for online and offline purchases.

Divisional Head, Retail and Consumer Banking at Sterling Bank, Mr. Shina Atilola, in a statement made available to the press explained: “Specta has disbursed about N100 billion in digital loans in three years. It is an important milestone worth celebrating by a platform that revolutionised and opened digital lending space in Nigeria.

“PaywithSpecta, the digital credit solution extension of Specta has also exceeded expectations. In a few months, it has provided over N5 billion in digital credits to Nigerians.

“We are proud to be at the forefront of deploying innovative solutions that meet the needs of everyday Nigerians and small businesses. Our profound gratitude to our esteemed retail customers and business owners for their loyalty that has made Specta and PaywithSpecta the country’s undisputed market leaders in digital lending and credit solution segments.”

Specta, an instant lending platform that offers up to five million naira consumer loans in five minutes, was unveiled in 2018 by Sterling Bank Plc.

The lending platform uses proprietary data and analytics to process and disburse consumer loans to borrowers who belong to pre-approved communities in less than five minutes without paperwork and collateral.

The types of loans offered include personal, payday, wedding finance, rent, education, and medical finance loans, among others, to salary earners and business owners.

Following the success of Specta, Sterling Bank recently creed another variant of it known as PaywithSpecta to enable customers to pay for goods in instalments. At the same time, Merchants are credited instantly, thereby helping businesses to increase sales.

PaywithSpecta offers digital credit limits to customers to purchase items in-store at Merchant locations or Merchant online platforms. It also allows Merchants to access credit for their business activities.

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