How much is African 4G spectrum worth? According to our research, quite a lot. African governments have sold around $15bn worth of wireless spectrum since 1998; they are still sitting on another $5bn worth of 4G spectrum – if only anybody would pay what they seek.
For the Xalam Africa 4G Spectrum Value Report, we have developed what is arguably the most extensive independent, African-focused analysis of 3G and 4G spectrum value available. We have analyzed 60 spectrum transactions across 20 African markets over the past 10 years (2006-2016), included in around 35 separate processes covering 1100MHz worth of 3G and/or 4G spectrum.
Some sample views from our Africa 4G Spectrum Value Report:
- Africa is at the very inception of a phase of strong 4G growth. The current LTE base is low; Africa accounts for less than 1% of the global 4G base at the end of 2015. Around half of the African subscription base actively uses data – but only around 2% of those use 4G devices.
- We estimate that African countries are sitting on around $5bn of 4G spectrum – based on valuation on market benchmark basis, not actual economic value.
- Rather than waiting for uncertain regulatory licensing schedules, operators are deploying what they legally can.
- The median market value of the 800 MHz band has increased nearly 10x from its initial CDMA-focused days.
- In African markets, the 2.6GHz band sells at a 6x-8x discount to other 4G bands
- For market leaders, acquiring high-priced spectrum is a risky investment, with potentially good returns over the long term. For some number 2 players and most number 3 players, 3G/4G spectrum acquisition (assuming high valuation) is the investment equivalent of throwing cash down a sinkhole.
- A similar risk exists for 4G spectrum – but the base case for African 4G, in our view, is not primarily an economic one. The price for 4G spectrum is a price to pay for long term relevance, and in truth, African 4G spectrum value looks better outside the traditional capital investment prism.
- We also value licences in upcoming (or ongoing) auctions in Nigeria, South Africa, Egypt, Senegal, etc.
- We assess the value of so-called African spectrum plays – Players whose spectrum assets have higher value than the net present value of their free cash flows – and we highlight why they should sell.
- And more..