Convergence Partners, an investment holding and private equity company controlled by Dimension Data SA chairman Andile Ngcaba, wants to raise up to US$500m to pursue telecommunications investments in East Africa and elsewhere on the continent.
The company is already invested in a number of big telecoms infrastructure businesses. It owns 12,5% of the Seacom undersea cable and, with local partners, has a 25% stake in New Dawn, a joint venture with Intelsat to launch a $230m communications satellite to serve Africa.
The satellite will be launched in December 2010 but discussions are already underway about launching a second satellite 18-24 months after that.
Convergence Partners has also acquired a 35% stake in Intra, a Maputo-based Internet service provider — Dimension Data division Internet Solutions has bought an additional 33% in Intra — and it is expected to announce a similar investment in Tanzania soon.
“The idea, ultimately, is to build a South and East African network where we can offer multi-country virtual private networks and the like,” says Convergence Partners CEO Brandon Doyle.
Convergence Partners wants to raise the funding it needs in the next 12 months. But the recession could make this difficult. “We are targeting $500m but given the market conditions we would be prepared to have a first close on a lesser amount and treat the $500m as our ultimate target.”
The focus is on investing in companies that are building access networks in the region, he says. Convergence Partners will work closely with Internet Solutions and another Didata business, Plessey, in its expansion strategy. Doyle says Didata is a key partner in its initiatives.
He says the Convergence Partners is hoping to take advantage of a trend in the telecoms industry where operators are beginning to outsource non-core operations, including the construction and management of their networks.
As the average revenue per subscriber continues to decline, operators will need to reduce their costs and will look to other companies to manage aspects of their businesses.
“We think there is scope for specialist infrastructure owners and operators to appear, specialising in the technology end of the business and freeing up operators to focus on their customers.”
Doyle downplays a suggestion that Convergence Partners is setting itself up for a fight with JSE-listed Altech Group, which is investing huge sums of money in building telecoms networks in East Africa. He says he’s had discussions with Altech CEO Craig Venter to explore ways the two companies could work together. — Duncan McLeod, TechCentral
