Global web infrastructure giant Amazon Web Services (AWS) has partnered with Safaricom to sell its cloud services to its East Africa customer network. This represents AWS's first entry into the growing consumer populations of Africa – it will face competition from Microsoft Azure's partnership with Liquid Telecom, which spans much of Southern and East Africa and has been operational since 2017.
Positive for Safaricom
The partnership is positive for Safaricom's cloud service revenue. At present, this is makes only a small contribution to the company's bottom line, but it has a great deal of potential as a future revenue stream.
Safaricom will also become the first "advanced consulting partner" for the AWS partner network in East Africa. The telco has been offering cloud services since 2011, with 10% market share of the industry at end-19. Cloud services are a pillar of Safaricom's enterprise business strategy, with the company aiming to:
- Leverage opportunity in private cloud services for the financial services industry;
- Re-sell third-party cloud services;
- Offer professional services, eg remote hands migration, back-up and monitoring.
Safaricom is active across the IaaS (infrastructure as a service), PaaS (platform as a service) and SaaS (software as a service) industries. The company also offers Google G-Suite-hosted email services.
Amazon Web Services in Africa
According to Synergy Research Group, global cloud infrastructure service revenues amounted to US$27bn in Q4 19, bringing the total for the year to US$96bn. Amazon's global market share is 33%, but this is its East Africa debut.
AWS is also expected to launch in South Africa in H1. These initiatives will put Amazon into direct competition with Microsoft Azure's partnership with Liquid Telecom in its bid to offer Africa-wide cloud services. As the populations and businesses of Africa grow, it creates more opportunities for local operators, but also the international tech giants that can partner with them.
We reiterate our Buy recommendation on Safaricom and will continue to monitor the development of this partnership in Africa's increasingly competitive cloud infrastructure services industry.