Liquid Telecom received a $180m (R2.5bn) cash injection from UK development finance institution CDC Group, as Africa’s largest fibre-network operator expands broadband infrastructure across the continent.
The investment will give London-based CDC a stake of almost 10% in Liquid, which is majority owned by Mauritius-based Econet Global. The funding will enable Liquid to expand its network in five new countries including Nigeria and Ethiopia, Chief Executive Officer Nic Rudnic said by phone. The group this month announced it would spend as much as $400m to develop its network in Egypt.
"This is a capital-intensive business," Strive Masiyiwa, Econet’s founder and majority shareholder, said on the same call from London. The plan was to seek a longer-term equity partner to back expansion into countries that don’t always offer a quick return on investment, he said.
Global technology giants are competing to establish affordable and efficient ways to extend high-speed internet through Africa, where hundreds of millions of people lack web access. Facebook has tried drones and satellites to expand in the continent, while a sister company of Alphabet’s Google is building a network of high-flying balloons to connect people. However, Liquid is pushing ahead with more traditional underground cables.
The Liquid deal postpones the need for an initial public offering of Johannesburg-based Liquid, which has about 70 000km of network running from Cape Town to Cairo. However, a long-mooted billion-dollar share sale of the overall Econet group in London remains a possibility, according to Masiyiwa.
"The listing option will always be there and we will follow instructions from the shareholders," he said. "We are a profitable company and have enough capital and funding for the next few years."
Econet’s other subsidiaries include Econet Wireless Zimbabwe Ltd., which is listed in Harare and valued at $5.6bn.