African countries are sitting on up to $5 billion (R75 billion) of value in potential 4G spectrum sales, according to a new report released by research firm Xalam Analytics.
The report, “The Africa 4G Spectrum Value Report: 4G Spectrum Valuation, Outlook, and Business Models in African Markets” examined 60 transactions in African markets over the past ten years, covering more than 1000 MHz of 3G and 4G spectrum.
The report also provides projected value ranges for upcoming and/or anticipated 4G spectrum auctions, including for markets such as Nigeria, South Africa, Egypt and Senegal.
“Surprisingly, buyers and sellers of African spectrum have few independent tools that allow for intra-African spectrum transaction benchmarking and value analysis”, says Guy Zibi, Principal with Xalam Analytics. “This report provides such a tool”.
Among other findings, the report highlighted the year 2016 as an inflexion year for 4G rollout in Africa. “More large-scale 4G networks will be rolled out in Africa in 2016 than ever before”, says Xalam Analytics.
The report also anticipates that 4G spectrum will generate more in proceeds than 3G did, and highlights the sharp inflation in the market value of a number of 4G frequencies.
“The inflation in the value of the 800MHz band is particularly dramatic” says Zibi. “In a number of markets, the value of 800MHz frequencies has risen 15 times over the past five years alone, and as much as 100 times over the past 10 years”.
The report also analyzes the prospects for the 700MHz and 2.6GHz bands in the African context, along with concerns around the feasibility of prices sought by governments.
“Initial operator returns from 3G spectrum acquisition are not good, and may never be” the report notes.
“And the value estimated on a benchmark basis is not always supported by business modeling. But ultimately, acquiring 4G spectrum is a price to pay for long term relevance”