Published: June 9, 2011
A Kenyan pay-TV company has caught the attention of global investors.
For avid TV viewers in Nairobi, it’s the equivalent of a must-see show. Wananchi Group, a Kenyan pay-TV operator, has sealed a deal for US$57.5mn in new funding from international investors to roll out its offering across the city, across the country and then even further afield.
Wananchi is Africa’s first ‘triple play’ company, offering pay-TV, high-speed internet and voice over internet protocol (VoIP, the ability to make phone calls over an internet line). Its network is already operational in parts of Nairobi, with plans to use the new funding to roll it out to the rest of the city as well as launch new pay-TV operations across other East African countries.
Part of the funding came from existing Wananchi investors including private equity firms Emerging Capital Partners and East Africa Capital Partners. But the round also attracted new financiers: Liberty Global, one of the world’s largest cable companies, Oppenheimer Funds and Canada’s Sarona Asset Management.
Seen this one before
Bryce Fort, for one, isn’t surprised by the success of Wananchi’s new funding round. The managing director and founding partner at Emerging Capital Partners (ECP) has helped his firm make nine investments in African mobile telecoms companies during the past 10 years. These deals have been good for business – ECP made a 4-times return on its investment in Orascom Telecom Algeria when it sold its stake in 2005, for example.
Today, Fort sees similar potential in companies such as Wananchi. “In 2001, mobile penetration in Africa was around 2-3%,” he tells EMEA Finance. “As mobile companies began to roll out they began to bring the capital, technology, management expertise together to address an unmet need.
“We see a lot of the similarities between internet and pay-TV today and mobile a decade ago. Pay-TV penetration is in the order of 2-3%, high speed internet penetration is in the order of 2%. There’s this tremendous pent up demand.”
Fort expects other investors to follow the lead of ECP and the Wananchi investors – and they should have plenty of opportunity to do so, he adds.
“I think investors’ eyes have been on the space,” he says. “The trend in Africa is one of growth – 5% GDP growth over the past decade, growth in the middle class, growth in disposable income. Pay TV and internet are core items that will track the growth of Africa. There will be plenty of investment opportunity for companies looking to tap this market.”
ECP and Wananchi’s fellow investors will hope the company stays one step ahead of competitors as the industry grows. Fort is confident that it will: “We believe Wananchi has a very good head start and will emerge as one of the leaders in this space when we look back on it 10 years from now.”