Leading Nigerian and African mobile telecom operators, including MTN,
Airtel and Etisalat are selling off over 30,000 base transceiver stations (BTS)
tower assets in a move that signals adoption of a new business model predicated
on cutting operational costs to shore up the average revenue per user (ARPU)
from voice subscription to independent tower management companies.
Investigation by PRESS confirmed that Africa's mobile
telecommunications revolution a decade and half ago saw mobile network
operators (MNOs) build their own infrastructure from scratch. "Operators
spent millions of dollars establishing passive mobile infrastructure which
included tower sites and all infrastructure on them, such as, shelters and
power and cooling facilities (excluding radio equipment).
Today MNOs who were afraid that their competitors could eavesdrop on
their communication lines if they shared infrastructure are now doing
co-location of facilities and infrastructure sharing on the same site. Carriers
in Africa are offloading the assets, which cost more to run on the continent
than in other parts of the world because of the need for backup generators and
batteries to guard against power failure.
In the words of Messrs. James Cotter and George Morris of Simmons &
Simmons LLP, such sharing is recognised by most governments and regulators as
an important facilitator of competition at operator level, improvements to
national network coverage (with resulting social and economic benefits)and
reducing environmental impact For instance, he explained passive infrastructure sharing in Africa
offered the prospect of opening up many markets to operators who would not
otherwise contemplate building out their own infrastructure; extending existing
operators' services and stimulating network build in locations without
coverage. Sale and 'leaseback' of passive infrastructure could make a great
deal of sense financially, generating a cash windfall and replacing burdensome
capital expenditure (capex) with regular and lower operating expenditure (opex.
PRESS gathered that African operators such as MTN, Bharti Airtel,
Orange, Vodacom, Egypt's Mobinil are working on selling mobile tower networks
in Africa, the latest examples of telecom operators looking to reduce exposure
to costly infrastructure in the region. In Africa, towers and the
infrastructure could account for more than 60 percent of the expense to build a
mobile network, according to data from tower company, IHS Holding Ltd.
MTN Group is on the verge of selling towers valued at $1 billion in
Nigeria, and Bharti Airtel Africa is selling about 15,000 of its towers
across 17 countries for $2bn- $2.5bn. Orange, France's largest phone company is
looking at disposing of towers in sub-Saharan Africa and Egypt.
According to TMT Finance, a shortlist of three bidders had reportedly
been drawn up for MobiNil's 2,500-3,000 Egyptian towers.*
Meanwhile, another operator in which Orange owns a stake, Sonatel, is
progressing with the sale of 3,000 towers across Senegal, Mali, Guinea Bissau
and Guinea Conakry. South Africa's Vodacom has to date, sold 1, 149 mobile
network towers to Helios Towers Africa in Tanzania. Bharti's sale is likely to
result in a split of the towers between multiple buyers.
IHS, American Tower Corp. (AMT), units of Helios Towers and Eaton
Towers Ltd are bidding for the acquisitions of the MTN and Bharti assets. These
companies, backed by cash from wealthy investors including billionaire George
Soros and Goldman Sachs Group Inc., have bought thousands of towers from
carriers in the region in the past two years.
In December 2013, MTN announced it had its tower portfolios in Rwanda
and Zambia to IHS Holding Limited. MTN sold a total of 1,228 mobile network
towers to IHS's subsidiaries in Rwanda and Zambia, comprised of 524 and 704
towers respectively, for undisclosed amounts. The deal was in line with MTN's
asset optimization strategy and built on two previous deals with HIS in
Cameroon and Côté d'Ivoire, for a total of 1,758 towers. Under the agreements,
IHS would acquire and operate the towers and related passive infrastructure and
would invest in a build-to-suit programmes to support MTN's future requirements
in both countries. MTN Rwanda and MTN Zambia will become the respective anchor
tenants on the towers for an initial term of ten years. The two transactions
brought the total number of towers in IHS's portfolio to 10,500 extending its PRESS
in the African market as at then.
It is believed that Barti Airtel and Etisalat are to sell towers valued
$500m and $400m respectively.
"The Value of Intellectual Capital is the ability to breed ideas
that ignite innovation" Anonymous.
By Chima Akwaja
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