British International Investment

Axian Telecom

AfricaEast AfricaWest AfricaCommunications & IT services

Axian Telecom is a provider of telecoms services and infrastructure focused on Madagascar, Tanzania and Togo. It also has operations in Senegal, Comoros, Mayotte, Réunion and Uganda.

Our investment

Description of the investment.

BII has committed two rounds of funding to Axian, in 2022 and 2024. Our financing will be used by Axian Telecom, to expand its footprint and increase customers’ access to affordable mobile and data services across Sub-Saharan Africa.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact
  • Increase and improve access to the internet (SDG 9C), leading to better quality of life.
  • Improve economic opportunity through increased firm productivity (SDG 8.2)

How?

Primary Secondary
  • Direct (Bond Financing, 2022): Our initial bond financing in 2022 allowed Axian Telecom to expand its footprint and increase customers' access to affordable mobile and data services, including in rural regions and among lower-income demographics across Sub-Saharan Africa. The company's expansion into underserved markets should disrupt monopolistic pricing policies and dated product offerings and improve vital digital infrastructure such as fibre optic cables, towers and subsea cables.

  • Direct (Loan to TowerCo of Africa, 2024): Our 2024 facility has been earmarked to fund the construction of 200 telecom towers in Tanzania. This will bring new mobile network capacity to uncovered areas or covered areas that require additional capacity. Higher tenancies on towers increase available capacity and competition in these locations, improving access, quality and possibly affordability.

  • Economic enabler: Our investments will enable greater coverage and better service quality which enhances firm productivity and supports economic growth.

  • Catalysing markets (Bond Financing, 2022): As an anchor investor we can crowd in and mobilise institutional capital, operating in telecommunication markets that are less familiar to bond investors. A successful bond issuance from an impact perspective means that the majority of the capital raised has come from institutional investors.

Who?

Stakeholder Geography Characteristics
Customers

Tanzania, sub-Saharan Africa

  • Tanzania: 85% SIM penetration; only 32% of the population have access to the internet with a 3G/4G network; and only 1 out 5 of the ICT price indicators are within the UN affordability target suggesting that a large majority of customers are only able to afford a monthly minimum allowance of 70 voice mins and 20 SMS. The fibre backbone and tower extensions will benefit those in less well-served locations and improved coverage is planned for the regions with the highest poverty levels.
Employees of businesses

Tanzania, sub-Saharan Africa

Employees of businesses are likely to experience productivity benefits through faster internet speeds. This is likely to mostly include urban and larger-scale businesses.

How much?

Scale Depth/Duration

(1) By 2025, the 2022 bond investment is expected to add 3 million new subscribers in Tanzania. The bond is expected to have an impact in other SSA markets where the bond proceeds are invested.

(2) The 200 new sites funded through our 2024 facility will significantly increase coverage, particularly in rural regions. They are strategically placed across the mainland and Zanzibar and will link previously isolated populations which will help to improve the lives of up to 600,000 people.

Impact will be deeper for new subscribers that previously have not had access to mobile or data services - these are likely to be lower-income individuals and population segments in rural areas. Individuals that are already connected will experience improved quality.

The duration of this impact should be lasting with a maintained increase in GDP. Impact will be deeper for employees of firms that are more reliant on the internet for their operations.

Contribution/additionality

Contribution/additionality

2022 Bond financing

  • Financial additionality: Anchoring a bond to mobilise a greater quantity of commercial capital.
  • Mobilisation: Expected that at least 70 per cent of total bond raise will come from institutional investors. The presence of development finance institutions (DFIs) acting as anchors sends a positive signal to the market and without DFIs the bond may not have been successful

2024 Debt facility

  • Financial additionality: provision of long-term USD financing that is not readily available in Tanzania

Risk

External Risk
  • Developing infrastructure and providing coverage does not always equate to access given other barriers such as affordability, i.e. of those with 3G coverage in least developed countries, 40 per cent are covered but do not use the internet.
Alignment Risk
  • Part of the use of funds will be flexible. However the risk of AXIAN not prioritising underdeveloped markets that are of interest to us is deemed to be low. We have confidence in AXIAN's strategy of entering underdeveloped markets where there is an opportunity to disrupt uncompetitive pricing and make heavy infrastructure investments post-acquisition.
Evidence Risk

It will be difficult to distinguish and confidently attribute the overall ecosystem changes and GDP uplift to these investments.

Impact score

Impact score (at point of investment)

The Impact Score is a tool to help us manage our performance against our strategic impact objectives. It is designed to incentivise investments that support our productive, sustainable, and inclusive objectives. You can find out more here.

The Impact Score is published for investments made from 2022 onwards. The Impact Scores are calculated at the point of investment. We publish the Impact Scores of new investments annually, once the information has been externally assured by an independent third party.

8

Environmental and social information

  • Environmental and social summary

    A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.

  • Environmental and social risk

    A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.

Environmental and social summary

We agreed on an ESAP with the company aimed at improving overall performance on environmental and social, and health & safety aspects across its subsidiaries, as well as to identify any legacy issues prior to Axian Telecom investment.

Environmental and social risk

Medium-High

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to [email protected] or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at [email protected]

  • Key facts

    First published

    When the investment was first published on the website database.

    :
    June 2024
    Last updated

    When the last quarterly update of the website database occurred.

    :
    June 2024
    Project number

    An identifier number shared by investments in the same project.

    :
    D5553
    Status

    The current status of the investment (green flag for active and red flag for exited).

    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.

    :
    Africa, East Africa, West Africa
    Country

    The countries where the investment delivers impact. Where impact is delivered in multiple countries, this is indicated.

    :
    Africa, Tanzania, Togo
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Communications & IT services

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.

    Investment type :
    Debt
    Start date :
    February 2024
    Amount :
    $30m
    Currency of investment :
    USD
    Domicile

    The company or investment fund’s place of incorporation.

    :
    Madagascar

Related investments made by BII into this company:

Investment name Commitment Region Sector Start date Status
Investment 01 $25m Africa, East Africa, West Africa Communications & IT services February 2022 Active

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