DD Africa Investment Strategy

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DD Africa Investment Strategy

• COMESA
• Sept 2004
• James McCormack

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Corporate overview
EUROPE Revenue US361 M Employees 1,000
UNITED KINGDOM Revenue US194 M Employees 1,100
ASIA Revenue US405 M Employees 1,500
NORTH AMERICA Revenue US504 M Employees 1,000
AFRICA Revenue US293 M Employees 3,900
AUSTRALIA Revenue US365 M Employees 1,000
Revenue for 12 months to September 2003
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Combined strengths
DD
Plessey
IS
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Why Africa?

• Political and economic stability improving
• Political SA is taking the lead via NEPAD/AU in
  this process
• Corporate SA is taking the lead in African
  investment
• Greatest ICT opportunities/potential are yet to
  comewho is going to be bridging the digital
  divide?
• By any measure.
• Phone lines, PCs, Internet connections per 1000
  people Africa has lowest
  penetration in the world
• Somebody is going to start bridging the
  digital divide.!!!!!

South African Foundation/UNTAD research June
2004
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Investment Decision making

• MACRO, MARKET and MICRO ASSESMENT
• Sustainable market opportunitypolitical and
  economic stability
• Functional infrastructure workable
  comms/connectivity
• Human Resource availability - ICT skills
  knowledge workers
• Favourable overall investment incentives free
  trade zones, tax .
• ICT orientation and readiness assessment
  government led catalytic projects - IT Parks and
  technology control nature
• Barriers to entry incumbents positioning
• SA peculiarity - Nature of the money donor
  led or self generated?
• Weighting factors Macro 60, Market 30 and
  Micro10
• Overall Score

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Specific Geographical Markets

• African Regional Hubs
• Primary markets, self sustaining economies, large
  anchor contracts
• Fully fledged DD/Plessey (IS) business
• Complete offering- full implementation, support
  and service
• Full establishment see Plessey Nigeria
• Equity purchase into existing business -unique
  African model-see ROE deal
• Annuity revenue must cover fixed Overheads
• African MINI Offices
• Minimal staffing max 5 full time pax
• Specialized offerings-full implementation,
  limited support and service
• Minimum country T/O -4,5m in YR 1 _at_ 10 ROS
• African LITE
• Zero permanent staffing
• Opportunistic specialist remote pursuit according
  to bidding criteria
• Full shared implementation, preferred partnership
  programme-support and service

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Key African Regional Hubs African
MINI African LITE French speaking
Africa-DD France
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40
29.5
23.5
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What will we do 2003/4

• Plessey - 70m
• DDSA (incl CT) - 30m
• IS - 1,5m
• Total - 101,5m

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COMESA Policy Highlights

• Vision, Goals, Objectives and Strategies
• COMESA, a sub-region where the effective use
  and application of ICTs enhances and accelerates
  economic growth, social development and regional
  integration and contributes to the achievement of
  the objectives of the African Union and NEPAD.
• liberalized and competitive market
• essential instrument to facilitate intra-COMESA
  and extra-COMESA trade.
• standardisation and economies of scale, factors
  that may be decisive in investment decisions.

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• developing regulatory and investor-friendly
  legislation for attracting local and foreign
  investors promoting competition
• the market will be required to share the burden
  of universal service/access obligations, the
  implementation of these obligations must be
  managed in such a way as not to become counter
  productive, so as not, for example, to defeat the
  ends of competition
• Universal Service Fund
• including sub-regional partnerships, and
  partnerships between public and private sectors
• The importance of assuring investors of a
  reasonable return on investment to raise the
  attractiveness of the COMESA market

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• Skill Development and Transfer of Technology
• Regional governments need to facilitate the
  development of software.
• In environments where private sector is at infant
  stage and government has a dominant role in
  shaping the economic sector, the government has a
  prime responsibility to encourage the adoption of
  information technology and with it computers as a
  tool.
• Define and publish the mechanisms through which a
  new entrant can access its competitors'
  facilities and/or unbundled elements
• Promote structural separation of lines of
  business and encourage unbundled costing
  methodologies
• upon socio-economic strategic plans of the
  enterprise. If a Ministry requires the services
  of the SOIE, it should buy them at commercial
  prices

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• These sources have either dried up or are being
  drastically curtailed, and private and local and
  foreign sources are becoming more and more the
  norm. To get access to these resources and
  complement the little available public and own
  institutional resources, their needs to be major
  changes in the whole approach to resource
  mobilisation, utilisation and
• Stability and predictability of the policy and
  regulatory environment and decisions are critical
  to investors especially private investors
  interested in long term investments
• Liberalising valued added and other non-basic
  services
• Restructuring of Incumbent Operators

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COMESA Policy lowlights

• The policy issue is whether and when should VoIP
  be openly provided. The other issue is when shall
  the providers of Internet services be permitted
  to rollout their own independent infrastructure,
  as part of the national telecommunications
  infrastructure
• Price Regulation/ Tariff policy guidelines
• Regulate prices/ tariffs if and when required in
  the public interest.
• 13. Consumer and user protection
• Take responsibility for consumer protection with
  regard to ICTs.
• Provide for the resolutions of complaints and
  disputes by consumers and users regarding ICT
  services.
• gradually privatise

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GOOD 2 GO !!!
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DD questions

• How many incumbents in COMESA have started
  unbundling - ?
• What about learning's from other common market
  initiatives eg. EU did this help eastern EU
  bridge the digital divide??
• Are there any incentives outside of the norm in
  the region eg. Registration and payment of taxes
  in more than 2 locations with double taxation
  agreements reductions in both regimes?
• Issue of rural/universal service is fundamentally
  uneconomic except by prepaid and then is it
  universal access?

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• Questions ???