Liquid Spurns Suitors, Plans Public Listing

Europe may soon have another publicly traded fiber operator to invest in, although the fiber itself isn’t actually European. Econet Group founder Strive Masiyiwa says the company is looking at a listing for Liquid Telecom, the pan-African network operator it controls.

Apparently, the company has received several multi-billion-dollar offers already, but Masiyiwa says they think Liquid should remain an independent provider. Liquid operates some 18,000km of fiber spanning 15 countries in East and South Africa, and has been building out some FTTH in some of those as well. They raised $150M for further expansion earlier this year, and hope to build fiber on western side of sub-Saharan Africa as well. Their customer list includes most of the multinational telecommunications operators that operate on the continent, including Vodafonoe, Orange, MTN, Bharti Airtel (with whom they did a wholesale deal just this week), and Tigo. You can bet that one or more of those was on that list of unsuccessful suitors (my guesses would be Vodafone and Bharti Airtel).

Are there other buyers that might be interested who wouldn’t upset the desire to remain an independent provider? It seems to me that there aren’t many infrastructure-focused operators likely to be quite as interested. For instance, Level 3’s ambitions are extensive, but putting a few billion into Africa is probably not very high on their list. Zayo’s just getting started on Europe, and Africa is probably a bridge too far even for them. Interoute might make sense, but I think their energies are also focused on European assets right now. There may be some financial players willing to dive in at the right price, but it’s more speculative than the sorts of things we see available in Europe and the USA.

The easiest case to make is for someone like Vodafone or Bharti Airtel, because they have the potential for synergies to justify paying a higher price and the local knowledge to do something with the assets. On the other hand, a dark horse could be one of the Chinese telecommunications giants. China’s government has been investing a great deal in Africa, and short term economics wouldn’t need to work for them to tell one or more of the partially state-owned giants to buy Liquid and run with it to gain a long term piece of the continent’s infrastructure. I don’t think such a thing would happen, but the probability isn’t zero.

I think a public listing, probably in London, is in fact the likely outcome. (And I’m curious to see what their financials look like, actually…) If they are able to use the opportunity to raise some additional funding for expansion, so much the better. It doesn’t seem to me that Econet is looking for an exit here, Liquid still has a long to-do list in Africa.

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Categories: Fiber Networks · Mergers and Acquisitions