Facebook to list today as Africa features as one of its fastest growing markets

Yesterday, Facebook set the share price for its first public stock offering at US$38 as the social networking giant made final preparations for what could be a record-breaking market debut.

The planned stock sale, which is expected to raise $18.4 billion for the company, places a total value for Facebook at $104 billion. By comparison, Apple is now worth slightly less than $500 billion, and Google is worth more than $200 billion. Hewlett-Packard, an older company that has struggled with changing technology markets, is valued at slightly more than $43 billion.

Some investment advisors have warned that opening-day exuberance could push Facebook shares to unsustainable heights. Analysts say its revenue growth has slowed and it has yet to show it can make money from the growing number of users who access Facebook’s mobile app on smart phones and other gadgets.

Facebook has grown rapidly and boasts more than 900 million users worldwide. While Africa is well below the developed markets in terms of the number of users, new data shows that Facebook is rapidly growing in Africa, having grown by 165% since July 2010.

The map below shows Facebook “friendships” as lights on a deep blue background. The eastern half of the United States and Europe shine the brightest, while China, Russia and central Africa, where Facebook has little presence, are mainly dark. However, data shows the Facebook user growth rate is increasing in Africa.

According to ICTworks, the fastest growing nations in Africa in terms of users are Ghana (85% increase to 1.1 million), Kenya (50% increase to 1.3 million users), South Africa (51% increase to 4.8 million users), Nigeria (154% increase to 4.4 million users) and Egypt (130% increase to 9.4 million users). As of December 2011, there were more than 37 million Facebook users in Africa.

We therefore see exciting opportunities for ICT companies in Africa to take advantage of not only Facebook but similar web-based data growth. Messaging applications such as Google and Twitter have also been one of the most important drivers of data growth. Another important trend worth mentioning is that messaging applications are not only driving mobile data consumption but mobile network operators have identified it as a value-add content platform to drive revenues. Safaricom in Kenya and Econet in Zimbabwe have made significant progress in this regard.

This reiterates that while voice revenues continue to see slower growth, there remain significant opportunities for new revenues driven by constantly mutating data requirements.

Imara is an investment banking and asset management group renowned for its knowledge of African markets.