Few companies outside of mobile network operators have done as much to transform the African Internet as Main One, Seacom, and Liquid Telecom. From the maturity of the international capacity market to the explosion of demand in the metro and the enterprise, their markets have now evolved, and so must they. This report analyzes how they go from here, strategic options available and M&A possibilities.

The three companies are the continent’s largest independent cross-country fiber plays. Together, they are largely responsible for upending African international capacity markets, driving sharp cuts in international wholesale prices by close to 80 percent over the past six years.

The top-line traffic projections that underpinned the development of African fiber models have largely come to fruition. The number of Internet connections in the markets covered by the Big Three Fibercos has risen 5x-10x over the past five years. Data traffic is exploding, and more than 75 percent of fixed broadband connections will be fiber-based over the long term in many markets.

But the fibercos are facing a number of fundamental challenges. Traffic growth is increasingly decoupled from wholesale capacity sales growth. African demand for leased international capacity is structurally unbalanced, the international fiber segment is oversupplied and fiber asset utilization rates are suboptimal. In effect, we believe the African international capacity business is now somewhere between a cash cow and a dog, and the economic value has moved to metro and enterprise markets. In turn, the Big Three Fibercos have to act.