Emerging Capital Partners, an international private equity firm focused on investing across the African continent, has committed USD25m to Wananchi Group, an East African media and telecommunications company specialising in pay television and high-speed internet services in Kenya and Tanzania.
ECP’s equity investment will be used to upgrade and expand the company’s existing network infrastructure, thereby enabling Wananchi to provide East Africa’s first triple-play service, consisting of digital pay television, high-speed internet and voice-over-IP services.
Wananchi presently serves the retail and corporate markets in Kenya and Tanzania through its consumer and corporate divisions. Wananchi’s consumer division operates under the Zuku brand and provides cable television and broadband internet services to residential customers in Kenya using a combination of hybrid-fibre-coaxial and WiMax technologies.
Wananchi’s corporate division, which operates under the SimbaNET brand, is a provider of internet and virtual private network services to corporations, local governments and non-governmental organisations in Kenya and Tanzania using a combination of metro-fibre, WiMax and VSAT technologies.
“ECP has been active in the African telecom sector for nearly a decade,” says Tom Gibian, chief executive officer of ECP. “Following on the tremendous growth in African mobile penetration over the last 10 years, we view broadband and related services as the next ‘game changer’ in African telecom. Wananchi’s product offering, network infrastructure and strong management are ideally suited to address the significant unmet demand for media and broadband services in East Africa.”
East Africa traditionally has been characterised by limited supply of pay television and internet services due to high cost and inadequate infrastructure. Penetration rates of cable television and broadband internet throughout Kenya and Tanzania remain low, standing at less than one per cent each. By comparison, South Africa’s penetration rates for pay television and broadband internet are approximately 15 per cent and four per cent, respectively, while Mexico’s adoption rates are 24 per cent and 20 per cent. ECP says East Africa’s demand for these services is growing, spurred by strong GDP growth, the emergence of a middle class, and the development of undersea fibre lines that are making services more accessible and affordable.
The investment in Wananchi is ECP’s tenth in the African telecom sector. The firm continues to hold stakes in three other telecom companies throughout the continent: Zain Gabon, MTN Cote d’Ivoire and Cellcom, a GSM operator in Liberia and Guinea.
