CSquared, former Google project, seeks to connect Africa with a $25 million raise

by MMC
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Lanre Kolade, CEO of CSquared, speaks to TechCabal about the company’s ambition to drive connectivity in Africa following its $25 million fundraising.

CSquaredthe pan-African technology infrastructure company that started as a Google project, announced a capital injection of $25 million. The equity financing was led by the Convergence Partners Digital Infrastructure Fund (CPDIF), the International Finance Corporation (IFC) and the International Development Association (IDA) Private Sector Window Blended Finance Facility. . Thanks to this new financing, CPDIF will take over Google’s stake in CSquared.

Launched as a project within Google in 2011, CSquared builds open-access broadband infrastructure and makes it available to local Internet Service Providers (ISPs) and Mobile Network Operators (MNOs). The company currently operates in six markets across the continent: Uganda, Ghana, Liberia, Kenya, Democratic Republic of Congo and Togo.

According to research According to the African Development Bank, Africa needs an estimated total of $135 billion per year to finance infrastructure development. This means that until this amount is reached, Africa will still face an infrastructure gap that will slow the growth of its digital development.

Lanre Kolade, CEO of CSquared, explained to TechCabal how the funding would contribute to the company’s pan-African ambitions. In this interview*, Kolade describes CSquared’s mission for pan-African infrastructure development, how the company plans to navigate the continent’s polylithic regulatory landscape, and how the new ownership structure will contribute to its mission.

TechCabal: Please share more about CSquared and the company’s mission.

Lanré Kolade: The company started as a project within Google in 2011 and morphed into CSquared in 2017 when Google brought in three other shareholders: Convergence Partners, Mitsui and IFC. We are building open-access digital infrastructure that enables the deployment of broadband networks. These networks are then shared by multiple customers which are mainly ISPs, mobile network operators and anyone with a valid license in our coverage area.

When we talk about broadband-enabled infrastructure, it’s just a measuring stick. We are also building wireless infrastructure networks and plan to build state-of-the-art data centers. We are therefore going to embark on everything that will enable broadband penetration on the continent. In Uganda, for example, we have an open-access Wi-Fi network that 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 funding. How will this contribute to the company’s mission?

LK: This equity investment will help us accelerate the implementation of our vision in existing markets, but also to enter new ones. What is important to understand is that Africa is a very large continent and the infrastructure deficit is enormous. This investment for CSquared is therefore part of a broader objective which is to raise 120 million dollars. We view $25 million as confirmation from our current financial partners that they believe in this project.

The company currently operates in six markets, most of which are what can be described as “pre-emerging.” Was this a deliberate strategy and are you planning to take on bigger markets like Nigeria, Egypt, South Africa etc? ?

LK: The CSquared playbook actually concerns the entire continent. Our current choice of markets is because we believed there were infrastructure deficits in these markets. We started in Uganda then went to Ghana, Liberia, Togo and the DRC. So we look at markets based on their size, but also based on our ability to add immediate value to our customers. If you look at the examples of markets like Egypt and South Africa, our impact will be more of a consolidation of assets.

In Nigeria, we have already identified M&A opportunities. We are also studying the cases of Egypt and South Africa, where we are exploring synergies with electricity utility companies to foster long-distance connectivity to connect rural areas. So, I repeat, our plan is pan-African, but as capital is limited, we need to plan and strategize for our expansion. The plan is to first consolidate and expand our reach in the markets in which we are currently present, and then move into markets where the infrastructure is actually very insufficient to make an impact.

Pan-African expansion also comes with compliance with various regulatory requirements. How do you plan to achieve this as you expand across the continent?

LK: From experience, I can say that many regulators and policy makers have understood that if they do not build this infrastructure within their localities, Africa will be digitally colonized. We realize that our people are behind and that the only way to make a leap forward is to make the infrastructure available. Some of these markets don’t even have regulations that support open wholesale access. So we are working with them to build capacity to put these frameworks in place.

There are cases where we partner with entities because, commercially and economically, the investment would not be viable. As in Liberia, we have partnered with USAID to secure grants that will help us make this transaction a success. Remember, you don’t want to put in infrastructure if it’s not sustainable, because it will just be a white elephant project. You want to be sustainable, you want it to add value in the form of economic and social impact. So I would say it gets a little easier with bureaucracy because you just have to explain the need for this infrastructure and why it lowers the barriers to entry for competition and social services.

Regarding your scaling roadmap, can you share more details on the markets you are considering?

LK: We will continue our consolidation in our existing markets. The DRC is a market we entered about two years ago when we obtained our license and deployed infrastructure in Kinshasa. We are deploying infrastructure in five other metropolises in the country. We also want to bring countries together; for example, allowing a customer to connect to someone in Gambia without having to go through undersea cables. So those are the kinds of ambitions we’re looking at.

We are also constantly in contact with regulators to see how we can obtain open access licenses to operate. So, as markets evolve and we evaluate opportunities, we double down. $25 million is not a lot of money for our ambition, which is why we need to be tactical in how we approach market expansion.

Concerning your partners, what is their importance in your mission?

LK: Our shareholders, like Convergence Partners, have a proven track record of developing new investment opportunities and adding value to investors in ICT assets. They bring the right knowledge and experience when it comes to investing in Africa. Partners like IFC and the development organizations that provide us with grants will continue to contribute significantly to our vision of connecting Africa.

Any final thoughts?

LK: If we don’t accelerate digital transformation on the continent, we will still see all this rural-urban migration. The reason why this movement is so important is that there is no infrastructure in the villages. We have brilliant people, we just need to give them a platform to express themselves, whether they are in the city or the village, and building the necessary infrastructure will facilitate this.

*Editor’s note: This interview has been edited for length and clarity.

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