debtOr decades ago, the growth opportunities that business leaders, economists and investors saw in Africa (from pharmaceuticals to minerals, telecommunications, light manufacturing and digital services) remained limitless. Last week, Radisys, a wholly owned subsidiary of Reliance Jio Platforms, announced plans to partner with Next Gen InfraCo (NGIC), a Ghanaian government-backed telecommunications company, to provide 4G and 5G shared network infrastructure technology to customers and businesses in Ghana and expand to other African countries in the coming years. This raises the possibility that Jio may clash with its Indian rival Bharti Airtel, which offers telecommunications and mobile services, in Africa as well. But that is unlikely, at least for now. Though in the same space (Airtel already operates in 14 African countries), Radisys has partnered with NGIC to provide telecommunications infrastructure and vendor services that are different from Airtel’s telecommunications and mobile money services.
Africa accounted for about 25% of Airtel’s FY24 consolidated revenue and the company has successfully turned around its business after a tough start-up period when it had to raise debt to stay in business and profitability was a concern. Costs have been cut and the focus has been on delivering 4G technology. It is the second-largest operator in Africa after South Africa’s MTN and has 38 million Airtel Money customers.
What Jio is doing
NGIC will work with local mobile network operators (MNOs) such as AT Ghana and Telecel Ghana, as well as Radisys, Nokia and Tech Mahindra (a managed service provider (MSP) for the Microsoft Core Network).“NGIC aims to leverage cloud and open RAN (radio access network) technologies to build a borderless network and expand beyond Ghana,” said Harkirit Singh, CEO of Ascend Digital Solutions, which specializes in building fixed and wireless network solutions.
The various partners are providing the full stack of core infrastructure, RAN, devices, platforms and application ecosystem, enabling Jio to replicate the successful template it established in India. “Our plan is to bring this proven model to Africa,” Singh said. Forbes India.
Open RAN infrastructure allows interoperability between cellular network equipment from different vendors, allowing these vendors to enter the market and provide telecommunications connectivity to regions of Ghana.
NGIC has launched a roadshow to raise $200 million from potential investors in the US, Middle East, Asia and Europe. The funds will be utilized over a three-year period, with the first fundraising round expected to close in August this year.
“The venture will provide 4G and 5G infrastructure — radio equipment, base stations, radios and antennas — to expand coverage and capacity so that all mobile network operators can benefit from it,” Radisys CEO Arun Vikshesvaran told Forbes India. For 5G technology, NGIC has an exclusive license to use it for 10 years through its nationwide shared network.
As with India, Radisys and its partners are betting big on 5G technology for the African market. “We are taking a modern approach. If you are going to invest in infrastructure in this day and age, you need to do it in a way that makes the most of what is available today in terms of life cycle management costs, network flexibility and disaggregation of software and hardware.”
“And it needs to be convenient for people. The devices need to be at the right price point. We’re not going to build a 5G network so that you can watch YouTube videos on your iPhone. There is a strong social purpose to this,” Vikshesvaran said.
Also read: Will Bharti Airtel compete with Jio in spectrum auction?
Founded in the US 38 years ago, Radisys focuses on three verticals – communication services sector, fixed broadband and mobility (wireless networks). In India, Radisys operates across all three verticals. “In communication services, our software and hardware is installed in 200 operational networks across the globe and is part of all modern VoLTE networks. We connect with 2 billion subscribers every day,” says Vikshesvaran.
So the software that rings, announces and conferencing when you make a call is run by Radisys.
In the fixed broadband space, Radisys provides fibre optic home and fibre optic building technologies, whose hardware and software are used by Reliance Jio. The company is involved in major FTTX projects with other customers across the globe, including Germany’s Deutsche Telekom.
Radisys, a privately held Indian company, said its net profit for fiscal 2023 rose 139% year-on-year to Rs 631.4 million, while its operating revenue rose more than 50% year-on-year to Rs 8,486.4 million.
Africa: Utilization Gap
The venture was well thought out. The journey spanned over two years and was driven by a strategy and vision to democratize mobility through meaningful connectivity. “We defined three key imperatives: availability of cloud-based and open RAN technologies to build a hyperscale telecom cloud, collaboration with technology partners who share our vision of creating highly skilled technical jobs, and providing affordable devices along with platforms and services/applications,” said Singh. Forbes India.
“The main challenge in the market is the usage gap, which requires more devices and an ecosystem of applications and platforms to drive consumption,” he said.
Airtel had a tough start as a telecommunications service provider in Africa, and it only became profitable in the continent in 2018, eight years after it acquired Kuwaiti telecommunications company Zain’s African mobile operations for nearly $9 billion.
Airtel insiders will tell you that Africa holds huge opportunities, but that doesn’t mean it’s an easy market to monetize business in. “Africa always has its own nuances. Repatriation of funds is a concern, as is dealing with foreign exchange and currency depreciation,” says an industry insider who worked at Airtel. “Africa is a continent, not a country. Francophone regions and markets are different from Anglophone and African-language markets. Apart from mature markets like Nigeria and Kenya, Africa is still a third-world market,” he told Forbes India on condition of anonymity.
Vikshesvaran disagrees. “If you enter a market after it has matured, you are late. You have to be part of the change to make something happen for society,” he says. Starting in phases, NGIC aims to roll out 4G and 5G networks in Ghana’s capital, Accra, in addition to a fixed wireless network.
Despite high mobile penetration (see Ghana snapshot table), the growth of 4G and 5G in Ghana is hindered by a lack of market competition. NGIC aims to address this imbalance through its Network as a Service (NaaS) model.
NGIC will work with the Smart Africa Alliance, which comprises 38 African countries and representatives from the International Telecommunications Union (ITU), African Union, World Bank, etc. “The Ghana model can be a playbook for all member countries and we are confident that at least six or seven countries will want to emulate it,” Singh said.
Monetization and Beyond
Capital investments in 5G technology mean an increased need for MNOs to monetize the technology. In India, the hype around 5G technology has grown faster than its use. While the technology is clearly useful, helping operators such as Jio and Airtel remove bottlenecks in their 4G networks, there are few use cases to test 5G’s capabilities.
The expansion of 5G into Africa will be a real challenge to monetize the technology. Vikshesvaran is realistic: “The question is, is there enough demand to capture and serve it? The answer is yes. The demand is for broadband applications, experiences and services. There’s no doubt about that.”
“What’s the most effective way to provide capacity to meet demand?” asks Vikshesvaran. “It’s the combination of available spectrum, the price point of the devices, and the best underlying technology to use to deliver this package. In 2024, it’s not efficient to build on 2G or 3G technology; you need to build on 4G and 5G.”
“There is no one-size-fits-all solution. In some frequency bands the ecosystem is different. In other frequency bands the ecosystem is better suited for 5G. We are building the underlying broadband infrastructure as a utility, at the best price per gigabyte, both in terms of capex and opex,” he said.
There is no question about Jio and NGIC’s strategy to build a shared telecom infrastructure ecosystem. If executed well, it will encourage competition among MNOs and inspire digital entrepreneurs to develop local content. R&D, the ability to plan products and think as a B2B player will also determine success. Of course, the ultimate test will be whether this venture is profitable.
