India's Tata Communications is set to expand in Africa with plans to invest in more companies following the arrival of new submarine cable systems in the region.
Tata already has a presence in South Africa, where the company acquired 56 percent stake in South Africa's fixed line operator Neotel, and now plans to make more investments in many countries in East and West Africa. Tata has also set up a point of presence in Nairobi, Kenya (POP) to route traffic to other African countries without passing through London.
This time however, the company is casting its net wide to include small ISPs in the region in its quest to expand the limited data market in Africa. Tata has already purchased wholesale capacity on the SEACOM cable and wants to leverage its global network to provide fully integrated services across the African region.
The company said the launch of another cable, the West Africa Cable System (WACS), a high-speed communication cable running from South Africa to the U.K., would lead to the opening up of more investment opportunities on the west coast of Africa. The cable, being developed by service providers including MTN, is expected to be operational before the end of next year. It is however, the first time that Tata is moving to invest in the West African region.
Tata CEO Srinath Narasimhan said last week that the company could not move its investments to West Africa because the region had no infrastructure in place to deliver a full portfolio of services in the region. The Indian company is partnering with local agents across eastern, southern and central Africa to provide applications for voice and data connectivity, content distribution, collaboration services such as telepresence, managed security services, application traffic optimization and management.
In January this year, Raman Dhawan, Tata's Africa Holdings managing director, said that as China was making inroads into the African ICT market through ZTE and Huawei Technologies, a possible way for India to increase its presence in Africa was for the private and public companies to join hands.
"The struggle for the control of the African ICT market by big companies will greatly benefit the region because Africa's ICT sector will develop and the cost of products and services will significantly come down," African telecom analyst Amos Makanya said.
In addition to the capacity on SEACOM, Tata is planning to use Neotel's network to expand to other countries within the Southern Africa region. Neotel is South Africa's second fixed-line provider that recently expanded its infrastructure in Southern Africa. The POP set up in Kenya will also provide Ethernet connectivity across Africa, linking corporations with offices that need bandwidth at cost-effective rates. Tata's expansion in Africa shows the appetite Indian communication companies have for the lucrative African telecom market that has been ignited by the Indian government's funding of ICT projects in the region.
The Indian government is currently sponsoring the Pan-African e-network project whose aim is to connect all African countries to satellite and optic fibre networks and to provide telemedicine, tele-education and video conferencing services to African presidents. The project will cost the Indian government more than US$125 million.
Indian companies are also providing computer training to countries in Southern Africa. Another Indian company, Bharti Airtel, is in exclusive talks with regional mobile operator Zain to buy its African operations.