African telecoms still face risks

In a comment published on Monday, Fitch said a lack of regulatory, uncertainty on progressive issues such as additional spectrum allocations and re-farming, mobile termination, and number portability could hinder financing opportunities for the sector.

The agency further noted that the risks associated with a low-rated sovereign, and inherent currency risk, make foreign currency debt a difficult proposition.

A way around this problem is to issue domestic currency debt; however, this option is not open to all African countries due to a lack of sufficient domestic investor demand, the agency said.

"International bond issuance is likely to be restricted by the size of operators, with many African telecoms groups adopting a portfolio approach to ownership, and funding smaller-country operations through inter-company investment.

"There are also signs that parts of the sector are overheating, particularly in mobile markets where too many operators exist."

It further noted that in markets such as Ghana, Nigeria, Tanzania, tariff competition is driving down average revenue per user and data growth is unlikely to offset such declines as networks are generally under-invested.