Omdia View: August 2024

In the Middle East and Africa, a key highlight during August 2024 was Bayobab announcing a strategic partnership with Eutelsat Group to enhance connectivity across Africa via satellite services.

MTN Group also completed the sale of its Guinea-Bissau unit to Telecel Group and the government of Uganda ceded a 60% stake in the troubled state-owned telco Uganda Telecommunications Corporation Limited (Utel) to Dubai-based global contractor Rowad Capital Commercial for $225 million.

Here are Omdia's top telecom highlights for August 2024 across the Middle East and Africa.

Bayobab partners with Eutelsat to drive digital inclusion in Africa

— by Danson Njue, Omdia senior research analyst, Middle East and Africa.

On August 15, 2024, Bayobab, a subsidiary of MTN Group, partnered with Eutelsat Group in a multi-year agreement aimed at enhancing connectivity across Africa using Eutelsat's OneWeb constellation of low-Earth orbit (LEO) satellites.

The partnership will leverage satellite technology to drive digital inclusion by addressing connectivity needs for the enterprise market while providing cellular backhaul particularly in the remote areas of the continent.

According to Bayobab, the partnership will enable the company to leverage Eutelsat's OneWeb constellation to deliver fixed connectivity services while enhancing rural coverage through high-quality broadband services and reduced latency.

Bayobab has outlined a roll-out roadmap that will see implementation across the continent by December 2024, with services already available across four African countries.

Bayobab rebranded from MTN GlobalConnect in May 2023 as part of a strategic transformation journey to connect Africa with open next-generation digital solutions through two business entities: Bayobab Fibre and Bayobab Communication Platforms.

By March 2024, Bayobab had acquired fibre operating licences in nine African markets, including Uganda, Côte d'Ivoire, and the Central African Republic (CAR).

Telecel rebuilds, acquires ailing MTN's Bissau unit

— by Thecla Mbongue, Omdia research manager for the Middle East and Africa.

On August 7, 2024, MTN completed the sale of its Guinea-Bissau unit to Telecel Group.

In October 2023, MTN had received a binding offer for the sale of both MTN Guinea-Bissau and MTN Guinea-Conakry for a consideration of US$1 for each of the companies.

MTN Group and Telecel then signed a sale and purchase agreement in December 2023.

Accordingly, the assets and liabilities of both MTN Guinea-Bissau and MTN Guinea-Conakry have been presented as held for sale.

As a result of the net liability positions for MTN Guinea-Bissau and MTN Guinea-Conakry on classification as held for sale, there was no further impairment on measuring at the lower of carrying amount and fair value, less costs to sell.

As of December 2023, MTN Guinea-Bissau's accumulated foreign currency translation reserve (FCTR) gain was R277 million (US$15.4 million) and MTN Guinea-Conakry's accumulated FCTR loss was R1.69 billion (US$94 million).

The Bissau deal was approved by the country's regulation authority in August 2024. MTN did not update on the Guinea-Conakry deal.

In the first half of 2024, MTN Bissau generated revenues of R187 million ($10.4 million), increasing by 21% compared to the first half of 2023 and representing respectively 0.6% of MTN's West and Central Africa revenues (excluding Nigeria) and 0.2% of the group's revenue.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) were negative for over a year. In 2023, MTN Guinea-Bissau breached a loan covenant because of negative EBITDA performance.

The full outstanding balance was R171 million ($9.5 million) at the end of 2023. No other MTN unit defaulted on their loans.

The sale will help MTN to focus on larger and more profitable operations. Telecel, on the other hand, is trying to increase its footprint.

Founded in the Democratic Republic of Congo in the 1980s, the group had over 10 units by the early 2000s when it gradually exited the industry. Its activities were eventually revived from 2017, with the acquisitions of operations in the Central African Republic, Liberia and Ghana. By expanding in Guinea-Bissau, Telecel will have to invest considerably in an operation in need of considerable investment.

The Guinea-Bissau telecom market is a duopoly in which MTN is facing tough competition from Orange. Telcos also operate in a challenging socio-political context.

According to Omdia, MTN lost its leadership position in 2020 to Orange and saw its market share drop from over 50% in 2020 to 36% in by the end of June 2024.

Uganda sells 60% stake in Utel to Rowad Capital

— by Danson Njue, Omdia senior research analyst, Middle East and Africa.

In August 2024, the Ugandan government ceded a 60% stake in the troubled state-owned telecom service provider, Uganda Telecommunications Corporation Limited (Utel), to Dubai-based global contractor Rowad Capital Commercial (RCC), in a deal valued at $225 million.

Utel (former UTL) was placed under court-appointed administration in November 2022 due to financial difficulties following the rebranding and establishment of Utel as Uganda's national telecom provider in April 2021.

The operator under the new owners, the Ministry of Finance and the Ministry of Information and Communications Technology, has been seeking international investment to fund its operations and network deployment.

Uganda's government has ceded a 60% stake in Utel to RCC in a deal valued at $225 million.(Source: Image by www.slon.pics on Freepik)

The new capital injection is expected to revitalize Utel's operational capabilities and enhance its market competitiveness.

According to Omdia market data, Utel had 755,753 mobile subscriptions and a market share of 2% at the end of June 2024.

e& enterprise completes $60M acquisition of Türkiye's GlassHouse

— by Walaa Ibrahim, Omdia senior research analyst, Middle East and North Africa.

In August 2024, e& enterprise, a division of e&, announced the acquisition of GlassHouse, a Türkiye-based provider of managed cloud, business continuity, and SAP infrastructure services.

This acquisition is part of e& enterprise's ongoing efforts to expand its operations and enhance its digital transformation capabilities.

GlassHouse, founded in 2004, serves over 2,000 enterprises. The company offers services in cloud management, data backup, and SAP infrastructure across Türkiye, South Africa, and Qatar.

This acquisition is in line with e& enterprise's strategy of broadening its presence in key markets, having previously entered Saudi Arabia in 2019 and Egypt in 2023. The addition of GlassHouse is expected to further strengthen its offerings, particularly in cloud services and managed infrastructure.

The integration of GlassHouse is expected to complement e& enterprise's existing portfolio, especially in SAP-related services, while the financial consolidation of GlassHouse into e& will begin in September 2024, with a minimal impact on the group's overall financial performance.

Du and etisalat by e& partner with Nakheel to deliver fixed telecom services for major Dubai projects

— by Walaa Ibrahim, Omdia senior research analyst, Middle East and North Africa.

Du, part of Emirates Integrated Telecommunications Company (EITC), and Etisalat by e& have entered a strategic collaboration with Nakheel, a member of Dubai Holding, to provide fixed telecom services and strengthen the ICT infrastructure in key Dubai developments. This partnership aims to equip Nakheel's major projects with essential telecommunications services.

The agreement is set to support Nakheel's projects by enhancing connectivity and providing residents, communities and businesses with advanced telecom solutions.

Both Du and Etisalat by e& will have equal access to deliver fixed services across these developments, fostering healthy competition.

This collaboration and other similar ones have an impact on the market, potentially leading to increased customer numbers and revenue for both operators. The ability to provide services to a wider array of developments across Dubai could drive subscriber growth in fixed and digital services. Additionally, this agreement could enhance service offerings and pricing options, further expanding their customer base.

You can find Omdia's full Middle East & Africa News Digest here.

For more information about Omdia's consulting capabilities, contact them directly at [email protected] or reach out to the Omdia analysts by emailing [email protected].

*Top image source: Informa Tech.