TowerXchange: Congratulations on announcing Eaton Towers’ deal with Telkom Kenya / Orange today. We understand the deal includes is a 15 year tower management and lease including a little over 1,000 towers, with a build to suite programme, and Telkom Kenya retaining ownership of towers. Can you confirm whether the deal includes all of Telkom Kenya’s towers, or whether some have not been transferred, and can you confirm whether it’s purely a managed service deal or are Eaton Towers to sell co-locations at the sites?
Peter Reinartz, Managing Director, Eaton Towers Kenya:
I can confirm the deal includes close to 1,000 towers and that is all the towers owned by Telkom Kenya.
Eaton Towers will maintain the towers, and the deal gives us exclusive rights to market the space on towers to other operators.
TowerXchange: Tell us about the context in Kenya - is there much bi-lateral tower sharing already taking place?
Peter Reinartz, Managing Director, Eaton Towers Kenya:
There is tower sharing already taking place in Kenya, but the market so far has not been very structured. Until now all the deals have between operators amongst themselves - Eaton is the first independent towerco in Kenya.
Our feeling is that the Kenyan operators will welcome a professional and independent party to share towers in a more structured way.
TowerXchange: What is the balance of focus between urban fill-in and rural network extensions?
Peter Reinartz, Managing Director, Eaton Towers Kenya:
Both are definitely a priority. There are still regions of Kenya that are not covered or are badly covered by mobile networks. And at the same time uptake of data, particularly on 3G, requires network densification in metropolitan areas - so the focus of new tower builds and co-locations is definitely on both urban cell site densification and rural connectivity.
TowerXchange: What’s the grid availability situation in Kenya, and how widely used are hybrid energy solutions?
Peter Reinartz, Managing Director, Eaton Towers Kenya:
Hybrid solutions will be one of the focus points for Eaton Towers Kenya in order to optimise costs. The grid in Kenya is unfortunately not one of the better networks on the continent, which poses challenges to operators and towercos alike.
TowerXchange: Are you able to mention any of Eaton’s partners who will be involved in Kenya?
Peter Reinartz, Managing Director, Eaton Towers Kenya:
Selection of partners is still an ongoing exercise, but the partners that we are already dealing with in other countries are certainly among those we are in discussions with, as well as talking to established partners in Kenya.
TowerXchange: What are your first priorities for the next 6 months?
Peter Reinartz, Managing Director, Eaton Towers Kenya:
As soon as possible we need to get the maximum number of sites upgraded to a level where they will be able to provide the required service without any SLA issues. As with any tower deal, one of our first priorities is to inventory what is in place and where upgrades and refurbishment needs to happen.
My team is coming together. On the one hand we can rely on Eaton Towers group resources to help during the transition. On other hand we have already a number of strong individuals from the Kenyan market who have shown their skills and expertise in related companies - we expect to have a full team in place shortly to enter into a strong partnership with Orange.
What is unique about Orange’s deal with Eaton Towers
“Like Orange’s recent tower deals in Cameroon and Cote d’Ivoire, our deal with Eaton Towers in Kenya helps us transform our passive operations from a capex to an opex model, helps us modernise and renew the network and improve coverage,” said Michel Faivre, Directeur Programme Partage d’Infrastructure AMEA at Orange. “The difference in Kenya is that we the towerco will operate all types of sites - not just standard radio sites but also technical sites and data centres. As Telkom Kenya’s assets include their original fixed line network, there are more technical sites.” Responsibility for energy costs is understood to have been transferred to Eaton Towers - there is no power ‘pass through’ clause.
TowerXchange asked Michel the difference between towers being managed by a towerco such as Eaton Towers compared to the towers being managed by an OEM like ZTE. “The contract with Eaton Towers is long term - 15 years, and they are investing capex. When we outsource to a manufacturer with OEMs contract it’s a shorter term, opex-only contract, with no end-user SLA objectives. They can’t invest. For example they can’t take a longer view on investing in equipment with RoI in 3-5 years.”
Highlights from the press release: Telkom Kenya signs tower management partnership with Eaton Towers
Telkom Kenya, which operates Orange’s mobile and fixed-line telecommunications services in Kenya, has signed an agreement with Eaton Towers for the management of its passive network infrastructure.
The fifteen-year tower management and leasing deal is focused on both the maintenance of existing sites by Eaton Towers and the building of new sites. This will help reduce operating costs and capital expenditure, while improving network coverage and quality, as well as reducing Orange’s overall carbon footprint.
Telkom Kenya will retain ownership of its existing portfolio of over 1,000 towers while Eaton Towers will invest in passive infrastructure upgrades and build new towers to provide Telkom Kenya with improved coverage and network quality. In parallel, the partnership will create a solid platform that will allow Telkom Kenya to focus on developing value-added services such as innovative data offers as well as an enhanced customer care experience.
“We are confident that our agreement with Eaton Towers is a step in the right direction,” said Mickael Ghossein, CEO of Telkom Kenya. “The partnership will place us in a strong position to expand our network and develop innovative new services, in particular in rural areas, helping us achieve our ambition to provide the Kenyan population with excellent nation-wide coverage and relevant offers. Through this partnership, we will be able to reduce our operational costs and, at the same time, minimise the environmental impact of our network by reducing the use of diesel fuel.”
Alan Harper, Chief Executive of Eaton Towers, said: “We are delighted to be working in partnership with Telkom Kenya as the first infrastructure tower company to operate in Kenya. This agreement extends our successful relationship with the Orange Group in Africa and brings significant benefits to all parties. Eaton Towers’ expertise in tower management and its commitment to top-quality service will allow Telkom Kenya to expand and improve its network while optimizing costs.”
