Download full Research Note: Download 010609RN 2009 Outlook
At the onset of 2009, we submit to tradition and examine a
number of key questions African telecoms investors will face in the New Year. All
major questions for 2009 are underpinned by one common thread: cash. The
ability to raise, generate and preserve cash will be arguably the most
important determinant of what survives, what struggles and what disappears. We see the key questions as follows:
1. Can mobile
networks withstand the surge in data traffic?
2. Is the
African wholesale business really this great – can all the capacity projects
survive?
3. Will
African mobile remain a great fundamentals business?
4. Can African
mobile valuations survive the economic downturn?
5. Will
the market see more consolidation?
A summary of our 2009 outlook: mobile networks will struggle
with data traffic but hold steady, African submarine cable projects surely can’t
all survive; the fundamentals of mobile are still great but increasingly brutal
at the edges; valuations are high and surely can’t keep this up, and we believe
the best value-creating acquisitions will be horizontal.
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