MERGERS, ACQUISITIONS AND FINANCIAL RESULTS

AFRICAN MOBILE INVESTMENT CAPEX WILL TOTAL US$46 BILLION IN 2009

The combined fixed and mobile investment or capex for the African continent is expected to reach $65 billion for the period 2000 to 2009. Mobile investment is expected to take the larger share of this with a cumulative capex of $24.5 billion in 2004 rising to $46 billion in 2009.

The driving factor behind this growth will be the expected rapid uptake of services by subscribers.The relatively new or fresh nature of the African mobile networks has implied that most of the new investment will be balanced between the access, transmission and core elements of the network.

However, looking forward the cumulative capex for mobile networks in Africa, excluding Nigeria and SA, is expected to grow to $23 billion, with the bulk of investment going into the operation support systems / business support systems / network support systems (OSS/BSS/NSS) element of the network, implying a higher level of maturity in the networks and the users.Excluding SA and Nigeria, BMI-T estimates the current mobile cumulative capex in Africa to be about $17 billion.

Together with these projections of capex, one must consider the major trends affecting the African communications market, including the much-anticipated wave of consolidation. Regional network operators such as MTN, Vodacom and Celtel have already made their presence felt and are positioning themselves for the future subscriber growth through local acquisitions. As we have seen, MTN has managed to pick some low hanging fruit in Cote d'Ivoire and Zambia.

However, what is interesting is that we are starting to see interest from other players such as MTC in Kuwait and Orascom, which appears to be rethinking its strategy concerning sub-Saharan Africa. Conversely, MTN is casting its net further a field and recently managed to secure a 49% stake in the second Iranian mobile network of Irancell through a down-payment of $358.4 million. The project is estimated to be worth $2 billion and will give MTN the ability to begin extending beyond Africa and into new developing markets. The Irancell deal is currently still on hold, pending the outcome of a court action being led by opposing bidder Turkcell.

Looking forward the division between African operators and Middle East operators may become blurred and perhaps we will start to refer to developing market opportunities.

BMI-T

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