Full Research Note - Download 12 02 08 RN Rwanda License
On November 15, the Rwanda Utility Regulatory Authority
(RURA) announced that Millicom SA had emerged as the preferred bidder for the
country’s third mobile license. Millicom bid of $60m, $4.5m higher than the
next bidder, Telecel Globe. We had argued in a separate research
note that based on fundamentals alone, this license was not worth more than
$20m. So what do we have to say for ourselves?
The first possibility is that our initial valuation was
wrong, potentially underestimating a number of key license elements. This would
also mean that the resiliency of African mobile market is more remarkable than
even we have previously assumed.
Our preferred view is that this license is overvalued. This
would suggest that fundamentals matter little when it comes to valuing African
mobile assets. If so, the African mobile market is still in the midst of an overvaluation bubble
that looks increasingly anachronistic.
