Armed with a recently acquired R5.1 billion war chest, businessman Andile Ngcaba’s tech investment firm Convergence Partners has announced plans to pump money into small cell technology infrastructure on the African continent.
Nqcaba made the remarks in an interview with ITWeb this week, after his company successfully closed its Convergence Partners Digital Infrastructure Fund (CPDIF) at $296 million (R5.1 billion), surpassing its initial target by over 18%.
According to the businessman, the funding will largely be used for investments in digital infrastructure, as it looks to boost connectivity in Africa.
The company has also set its sights on boosting digital inclusion on the continent, by making investments in low-cost connectivity solutions.
“The other key theme driving our future investment focus is network densification driven by growing mobile data traffic, 5G rollout, IOT network requirements and the growing need for spectrum and power-efficiency, with a view to enabling low-cost access and continuing our journey of tackling the digital inclusion problem,” says Ngcaba.
“We have recently concluded an agreement to acquire an African business that is in this space, deploying small cell infrastructure technology at an entry capital cost that enables wholesale pricing to MNOs [mobile network operators] that, in turn, allows them to pass on affordable broadband to low-income consumers.”
A small cell network is a new form of wireless infrastructure that consists of a densely-packed system of numerous antennas distributed in living and working spaces.
According to Mordor Intelligence, Africa’s small cell market is expected to register a CAGR of 17% over the forecast period 2021 to 2026.
It says small cell towers deliver a cost-effective solution for filling coverage gaps, growing bandwidth, and getting the networks ready for 5G without the need to build more expensive macro sites.
With the increase in the number of mobile data traffic in the region, it says, the demand for advanced telecommunication networks is growing, which is expected to boost the market for small cell over the forecast period.
However, Ngcaba did not disclose the name of the small cell African company that Convergence Partners has agreed to purchase.
Besides small cell tech investments, digital infrastructure is also on Convergence Partners’ radar, he says.
“We are focused on investing in digital infrastructure opportunities, such as data centres, fibre networks, towers, edge, artificial intelligence, internet of things, cloud computing, fintech platforms and other critical digital infrastructure that is vital for the growth of the digital economy in the region.”
In addition, he points out the firm is seeing prospects in fintech increasingly driving the delivery of financial services across the African continent.
“To extend the reach of financial services to a broader cross-section of the population, it will be essential that capital markets capability in the second tier and challenger banks is improved, and we expect to start seeing gradual integration of decentralised finance and blockchain technologies, approaches and thinking into the mainstream banking sector.
“As private equity investors, we are actively pursuing later-stage opportunities in this area, backing the emerging winners. We are particularly interested in the B2B players that are enabling market participants with already-scaled customer bases to deliver meaningful digital financial solutions to customers.”
Ngcaba adds that CPDIF’s first investment was in Ctrack, a software-as-a-service digital infrastructure platform providing fleet management, insurance and telematic solutions and asset tracking solutions to its subscribers in Africa and the Middle East.
“This [Ctrack] investment straddles two out of the five key emerging growth themes we see in our chosen sector, internet of things and artificial intelligence, and the intersection between them, by scraping data from an installed base of mobile devices and returning this to customers as insightful, real-time analytics.
“Ctrack operates mainly in the heavy fleet segment, where it has deep domain knowledge that it utilises to tackle the significant problem statements, such as operating efficiency, drive behaviour, compliance, and safety and security issues.”
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