African countries can’t handle more than 3 telecom operators

There is going to be more consolidation in Africa’s mobile network business according to a new report by Moody’s Investors Service (MIS).

Dion Bate, the Vice President and senior analyst at MIS’ Corporate Finance Group in South Africa said recently: “Not all countries are able to support a large number of operators, and smaller wireless operators are finding it increasingly difficult to compete and increase their market share profitably.”

The report states that countries with four or more operators, or with telecoms companies that have a market share of less than 15%, are likely to be swallowed up by bigger competitors.

The average number of operators in each African country is three, with some countries, such as Uganda, Cote d’Ivoire and Tanzania, having six operators, the MIS report reveals.

French-owned Orange sold out its interests in the Ugandan market last year

Bate said: “Companies considering potential mergers or acquisitions will be hoping for cost savings through improved economies of scale and the opportunity to apply uniform and improved branding, service and product offerings.”The report states that weaker third and fourth-tier operators will seek partners to benefit from scale or an outright exit, while operators based outside the region will seek to rationalise.

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