Aattractiveness of the African telecommunications industry

Abstract

As companies worldwide make a beeline towards Africa in the hope of high returns on investment, it is necessary for Indian companies to take an informed stand on this subject and not be swept up in the ongoing bandwagon effect. The last two years (2008 and 2009) have witnessed attempts at three deals in the telecommunications sector between India and Africa – two major, albeit failed deals (Reliance-MTN and Bharti-MTN) and one successful deal (Bharti-Zain). Rather than believing the potential of Africa to be a fait accompli and searching for firm-level reasons behind the growing interest shown by Indian companies in Africa, this study endeavours to objectively analyze the African market and to assess whether it is feasible and profitable to invest in; and if yes, to recommend a strategy for such an investment from a telecommunications perspective. This study progresses in three phases: *The first phase entails studying Africa’s macroeconomic climate and collecting parameters that indicate the potential of various countries with regard to foreign investment or expansion. *The second phase involves analysing three pre-defined regions in Africa for their attractiveness with respect to foreign investment in the telecommunications domain. *The third phase is contingent on the results of our analysis in phase two. If our analysis results indicate a positive climate for investment in Africa, then the third phase would involve proposing a strategy for an Indian company to penetrate and expand its operations in Africa.