Hit or Miss

Another private equity company with funding from deep-pocketed Middle Eastern individuals and institutions has identified Africa's telecoms sector as a viable investment. The CEO of UAE-based Middle East and African Investment Company (MEAIC) tells Tawanda Chihota and Ronan Shields how the company is aiming to have 10 million subscribers in place in Africa within 24 months.

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By  Tawanda Chihota and Ronan Shields Published  April 1, 2007

"We are not going to pay billions for licences like some operators from this region have been doing," emphasises Edwin Rowell, the genial chief executive of Middle East and African Investment Company (MEAIC), who also heads up the company's telephony business. "However we believe 80% of subscriber growth in telecoms will be generated from emerging markets like Africa, and so there is a great opportunity there," he adds.

MEAIC is a private equity company registered in the UAE, and backed by 16 high profile individuals and institutions of significant means, predominantly from within the Gulf region. Given the private nature of some of the individuals involved, Rowell is not too keen to place the spotlight on them too significantly at this point, though he would confirm on the record that a number of the individuals are influential figures from the Saudi, Kuwaiti, Bahrain and UAE establishments.

MEAIC is involved in the execution, conception and funding of ventures throughout the Gulf and Middle East region, and is also keen to remain involved to help shape the strategic direction of the investments it enters. A recent strategic decision was taken at board level to focus on investment in Africa, with a specialised focus on telephony, energy, mining and real estate.

The investment firm's plans for telephony expansion are bold. The target is 10 million subscribers connected to networks across the continent of Africa within two years, and the first peg along that path is the recent award of a universal service licence in the East African country of Uganda. Last month, MEAIC announced that its Ugandan operation, Hits Telecom Uganda, took possession of a service licence, allowing it to operate a range of access technologies including CDMA, GSM, WCDMA and WiMAX.

"We are looking to launch commercial services toward the end of this year, or early next at the very latest," comments Rowell. "Our aim is to immediately work on our broadband rollout. The short-list for setting up a GSM operation exists and we have a second rollout team scheduled to arrive in the country on April 3, consisting of 17 people." Hits Telecom has already pledged an investment amounting to US$150 million into the network, though Rowell divulges that he has recourse to an additional US$50 million from MEAIC investors should he require it, though he is confident he won't.

Hits Telecom Uganda's local partner is a company called Veritas Communications, which represents a number of companies operating in the country, and whose chairman Abu Mukasa is a well-established entrepreneur with deep connections all the way to president of Uganda.

"At the moment, telecoms services in Uganda are appalling," Mukasa asserts. "The opportunity in the country is significant. Uganda has the youngest population in the world with an average age of 15 and-a-half years, and only 2.4 million people as subscribers to telecoms services." Mukasa believes the remaining addressable market for telecoms connection in the country is at least a further 7-8 million.

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