Capitalising a rapidly changing telecommunications, media and technology sector
As facilitators and providers of funding, investment banks have a major role to play in bringing the TMT sector’s new technologies to users
The massive advances in our smart devices’ technology and processing power have become a given. Most people have lost count of the number of times they have been told that smart devices now have more processing power than the spacecraft used in Nasa’s Apollo moon missions.
These advances, along with the dramatic drop in the price of data storage and the ability to move data through fibre-optic and 4G mobile networks at high speed, are game-changing.
It’s mind-blowing when you stop and think about this. What does it mean for how we live our lives and do business, and how do we keep pace with the rapidly evolving technology?
Most of us are not digital natives, yet we embrace the convenience of the computing power built into smartphones (and, to a lesser extent, feature phones). Besides phone calls, which are so last century, our mobile devices give us access to messages, emails and calendars. My device has a “more than I could ever wish for” 12-megapixel camera and 64GB of storage (I have an old version), streams YouTube and Netflix content, has the Uber app, Google Maps, and Apple’s health data that my Discovery medical aid uses to give me loyalty points.
Going forward, with a virtual-reality headset and Minecraft loaded on my iPhone, I think my kids are going to disappear into a virtual world of their own creation never to be seen again – but that may still be wishful thinking!
In addition to the conveniences we now take for granted and which make life more fun, global connectivity brings us the latest thinking and can substantially improve education and knowledge sharing. The internet has empowered individuals in myriad ways, whether it’s online shopping or banking or simply helping people understand what products are out there and what they cost without having to walk through a shopping mall.
Yet this “new normal” is both exciting and scary. As a facilitator and provider of capital, Rand Merchant Bank (RMB), an investment bank, has a major role to play in bringing this wizardry to users by investing in the infrastructure and businesses of our clients in the telecommunications, media and technology sector.
It’s not easy, as many of these opportunities are new businesses involved in new technologies, which is not an area of comfort for traditional banks. Using money deposited in the bank by pensioners, widowers and orphans to invest in early-stage businesses in a rapidly changing environment has never been a great banking business model.
But the sector has substantial capital requirements and, to keep prices low for users, the sector needs access to cost-effective funding. RMB recognises that facilitating funding to its clients requires a detailed understanding and mitigation of the risk in the sector and close collaboration among its product experts.
RMB has experience across the continent in investing in, and rolling out, the infrastructure that underpins this Fourth Industrial Revolution, including fibre-optic networks, 3G/4G networks and tower infrastructure, and data centres.
Africa has great potential to leapfrog developed markets because of the vast gap between the two. The continent doesn’t carry the heavy burden of old technology and can charge into the future much quicker than the rest of the world.
RMB facilitated Royal Bafokeng Holdings’ participation in the 2016 buyout of Neotel by Liquid Telecom, a transformational transaction that created the largest pan-African broadband provider on the continent. Liquid Telecom’s network now stretches from the Cape to Cairo.
RMB prides itself on having innovative thinkers. Its founders were rather prescient when, in 1977, they coined the slogan “Traditional values, innovative ideas”. That attitude informs the bank’s approach and is part of its DNA. Working across our product teams, within our risk functions, and together with our clients, we ensure bespoke solutions to address the challenges of the telecommunications, media and technology space.
For more information, visit the Rand Merchant Bank website.
This article was paid for by Rand Merchant Bank.