Lanre Kolade, CEO of CSquared, speaks to TechCabal about the company’s ambition to foster connectivity in Africa following its $25 million fundraising.
CSquared, the pan-African technology infrastructure company which started as a Google project, has announced a $25 million capital injection. The equity funding was led by the Convergence Partners Digital Infrastructure Fund (CPDIF), International Finance Corporation (IFC), and the International Development Association’s (IDA) Private Sector Window Blended Finance Facility. Through the new funding, CPDIF will assume Google’s equity stake in CSquared.
Launched as a project within Google in 2011, CSquared builds open-access broadband infrastructure and makes them available to local Internet Service Providers (ISPs) and mobile network operators (MNOs). The company is currently present in six markets across the continent: Uganda, Ghana, Liberia, Kenya, the Democratic Republic of Congo, and Togo.
According to research by the Africa Development Bank, Africa requires an estimated total of $135 billion annually to finance infrastructural development. This means that until this amount is reached, Africa will still face an infrastructure gap which will slow down its digital development growth.
Lanre Kolade, CSquared CEO, spoke to TechCabal about how the funding will contribute towards the company’s pan-African ambitions. In this interview*, Kolade outlines CSquared’s mission for pan-African infrastructure development, how the company plans to traverse the continent’s polylithic regulatory landscape, and how the new ownership structure will contribute towards its mission.
TechCabal: Please share more on CSquared and the company’s mission.
Lanre Kolade: The company started as a project within Google in 2011 and metamorphosed into CSquared in 2017 when Google brought in three other shareholders: Convergence Partners, Mitsui, and the IFC. We build open-access digital infrastructure that enables the deployment of broadband networks. These networks are then shared by multiple customers who are mostly ISPs, mobile network operators and anybody with a valid licence within our footprint.
When we say broadband-enabled infrastructure, it’s just a yardstick. We also have wireless infrastructure networks that we build and have plans plan to build edge data centres. So everything that is going to enable broadband penetration on the continent is what we’re going into. In Uganda for example, we have an open-access Wi-Fi network which ISPs have access to so they don’t have to build their own network. Our mission is to build a digitally connected Africa.
CSquared just raised $25 million in equity financing. How will this contribute towards the company’s mission?
LK: This equity investment will help us accelerate the execution of our vision in existing markets, and also to go into new ones. What is important to realise is that Africa is a very vast continent, and the infrastructure deficit is huge. So this investment for CSquared is part of a bigger target which is to raise $120 million. We see $25 million as a confirmation from our current equity partners that they believe in this project.
The company is currently present in six markets, most of these being what can be referred to as “pre-emerging”. Was this a deliberate strategy and are there plans to pursue bigger markets like Nigeria, Egypt, South Africa, etc?
LK: The playbook for CSquared is actually the entire continent. Our current choice of markets is because we felt there were infrastructure deficits in those markets. We started in Uganda and then went to Ghana, Liberia, Togo the DRC. So are we looking at markets on the basis of size but also being able to add immediate value to our customers. If you look at the example markets like Egypt and South Africa, our impact will be more of a consolidation of assets.
In Nigeria, we already have some M&A opportunities identified. We are also looking at Egypt and South Africa where we are exploring synergies with power utility companies to foster long-distance connectivity to connect rural areas. So to reiterate, our plan is pan-Africa but because capital is limited, we have to plan and strategise our expansion. The plan is to first consolidate and expand our reach in the markets we are currently in and then go to markets where the infrastructure is actually very deficient to make an impact.
Pan-African expansion also comes with abiding by various regulatory requirements. How do you plan to achieve this as you scale across the continent?
LK: From experience, I can say that a lot of the regulators and policymakers have understood the fact that if they don’t build this infrastructure within their localities, Africa will be digitally colonised. There is that realisation that our people are behind and the only way to leapfrog is to make infrastructure available. Some of these markets don’t even have the regulation that supports wholesale open access so we work with them in capacity building to get these frameworks built.
There are cases where we partner with entities because commercially and economically, the investment wouldn’t be viable. Like in Liberia, we partnered with USAID to get grants to help us make that transaction a success. Remember, you don’t want to put infrastructure in the ground if it is not sustainable because it will just be a white elephant project. You want to be sustainable, you want it to add value to it in the form of economic and social impact. So I would say it’s becoming a bit easier with the red tape because all you have to explain the need for this infrastructure and why it reduces barriers of entry for competition and social services.
In terms of your scaling roadmap, can you share more details on which markets you have sights on?
LK: We will continue our consolidation in our existing markets. The DRC is a market that we got into about two years ago when we got our licence and we deployed infrastructure in Kinshasa. We are deploying infrastructure in five more metros within the country. We are also interested in stitching countries together; for example, enabling a customer to connect to somebody in the Gambia without having to go by the submarine cables. So those are the kinds of ambitions that we’re looking at.
We are also constantly engaging with regulators to see how we can get open access licences to operate. So as the markets come up, and as we evaluate the opportunities, we double down on them. $25 million is not a lot of money for our ambition which is why we need to be tactical about how we approach market expansion.
In terms of your partners, how important are they in your mission?
LK: Our shareholders like Convergence Partners have a proven track record of developing new investment opportunities, as well as adding value to investors across the ICT assets. They bring in the right knowledge and investment experience in Africa. Partners like the IFC and the development organisations that we get grants from will continue to contribute significantly to our vision of connecting Africa.
Any final thoughts?
LK: Unless we increase digital transformation on the continent, we will always see all this rural-urban migration. The reason there is so much of this movement is because there’s no infrastructure in the villages. We have brilliant people, we just need to give them a platform to express themselves regardless of whether they are in the city or village and building the necessary infrastructure will facilitate that.
* Editor’s note: This interview has been edited for length and clarity.