As Ghana’s three towercos stop to draw breath and consolidate their assets, we checked in with Gareth Townley, Managing Director of Eaton Towers Ghana, to find out how the market has developed since he last spoke to us two years ago, to find out how currency and power crises are hitting the market and to look towards the future of the country’s passive infrastructure.
TowerXchange: Given the fact Eaton Towers Ghana is well established in Ghana, where is the company’s focus in terms of capex and management time? Will this be significantly affected by the new acquisitions in the country?
Gareth Townley, Managing Director, Eaton Towers Ghana:
The acquisition is a key step for us as it gives us scale which means that we can offer a lot more to our customers and blend networks into one portfolio to create synergies. From an operational view, we’ve been providing market-leading quality of service, so the only issues we’ve been having are the currency depreciation and energy price increases. Energy prices are up 100% in the last 12 months in Ghana which together with the fall in the cedi has put pressure on our margins.
None of us can control the energy price but we can control our consumption, so for example we’re removing air conditioners and using a free cooling system on many sites: often the air conditioning units use more power than the electronic equipment.
We have been investing in building new towers and we expect the demand for new towers to increase significantly in future.
TowerXchange: How are buying decisions made in Ghana at the moment and is this something which is currently evolving?
Gareth Townley, Managing Director, Eaton Towers Ghana:
Our buying process is going through a lot of changes. Major purchases used to go through Europe but now go through our new regional office in Nairobi and we are using more vendors from India and China. It also helps to bundle together all of our African markets for purchasing purposes, to get better prices from bigger scale.
TowerXchange: Talk to us about the integration of new assets into your sales process and the extent to which new acquisitions might overlap with the existing assets you’re marketing from the Vodafone portfolio.
Gareth Townley, Managing Director, Eaton Towers Ghana:
Overall the new towers fit well alongside our existing portfolio. We will take the Airtel network and do overlaps analysis based on site distances with the Vodafone network. Then we make it specific for the customer. For example for MTN, we take our portfolio and their portfolio including their co-locations on other towercos’ sites and work out what is needed from there. In addition, we look at the local economic activity and demographic information around each tower; for example a young local population could consume more data and enable an operator to sell more data products. When towers are very close together we can look at combining into one site or certainly ensure we have cost synergy.
TowerXchange: Eaton Towers co –founder Terry Rhodes talked about there being an ‘outbreak of rationality’ in the acquisition of assets from Airtel such that most countries in Africa now have one, at most two towercos present in them. How has the presence of three major towercos affected the dynamics of the market in Ghana?
Gareth Townley, Managing Director, Eaton Towers Ghana:
Four, if we include Airtel Tower. It’s quite ironic, when you speak to the operators they claim it’s the most competitive telco market in the world and I always claim we have the most competitive tower market in the world to match it. Colocations and sales have been strong and have been driven by the Ghanaian regulator who has progressive rules on colocation and won’t grant a permit to build a tower if there’s one in the area where you can colocate. Our tenancy ratio is high and continues to grow.
As there are so many towercos, there’s a bit of pressure on pricing. We are a very fast moving, lean, private towerco, with no operator shareholding, so it keeps us sharp, keeps our uptimes high and keeps us competitive. Ghana was the learning ground for Eaton Towers and we will reach our targets here.
TowerXchange: A recent BMI report indicated that Ghana is a strong market for towercos, generating more revenue per site than most other global regions – what do you think drives this?
Gareth Townley, Managing Director, Eaton Towers Ghana:
If it is correct then great, it means we’re in the right market! The biggest driver here is that you’re forced to colocate in Ghana, the local regulator won’t let you build a new tower within 400m of another one, so even if the MNO wants to build their own, they’re not allowed. Because the cost of operating in Africa is high, this is reflected in the lease pricing and our clients are on long term contracts with prices pretty much fixed with contracted annual increases. This means we can be confident that we have a good guaranteed revenue base to build on each year and we can then look to expand with new towers in locations that can be shared.
TowerXchange: Why is the Ghanaian regulator so stringent in terms of tower construction?
Gareth Townley, Managing Director, Eaton Towers Ghana:
Initially when MNO’s started building towers in Africa there was a proliferation of towers. Colocation was rare as the network access was used as a barrier to entry. Today it’s not sustainable to have three towers next to each other in a small village as we have had in the past.
The latest development is rooftops, people used to stick ugly red and white towers on top of beautiful buildings but we’re now working to take over rooftop sites and disguise the antenna as flowerpots or lights and offer access to all mobile operators. The Environmental Protection Agency wants fewer and less visible towers but with the data demands we’ll need more towers in urban areas, so rooftop and in-building solutions are the future.
TowerXchange: How will you develop your rooftop portfolio? How does it differ from towers?
Gareth Townley, Managing Director, Eaton Towers Ghana:
We’re trying to work with property management and property development companies. For property managers there’s a benefit in having good communications links offering all networks across their commercial and residential portfolio.
In terms of what we can offer to our clients, it’s exactly the same as a tower but we invest in antennas and cabling rather than a steel structure.
TowerXchange: Given governmental pressure on MNOs to improve QoS and the demand for better rural coverage, how is this filtering down to the towercos and what action are you taking?
Gareth Townley, Managing Director, Eaton Towers Ghana:
In terms of quality of service it can work for us. The regulator will fine operators who don’t deliver on QoS, so we will find the region where they’ve have trouble and see what we can do to help. In the end they will need more towers and infill solutions.
Rural coverage has always been a challenge; Ghana Investment Fund Electric Communication (GIFEC) is a scheme where operators and towercos put 1% of revenue into the fund to support rural solutions. In deep rural areas the local economy can probably only support one tower. So either the operators divide and conquer – maybe they will pick five areas each and have their own monopolies in this village or the tower companies build rural towers if more than one operator wants to share.
TowerXchange: How has the devaluation of the cedi affected towercos and other participants in Ghanaian telecoms trade?
Gareth Townley, Managing Director, Eaton Towers Ghana:
It caught everyone by surprise, it was the worst performing currency in the world January-August 2014, 70% depreciation in six to seven months. The industry pressed the pause button. Everyone was waiting to see when it would stop. All we wanted was stability and we got that a couple of months ago. We now feel the worst is over and all the companies are committed to Ghana and to the growth that will come from Data, Mobile Financial Services and Entertainment.
TowerXchange: Isolated incidents aside, it seems the grid is fairly good in Ghana. What is your experience of that and what are the implications for the depth of service you have to provide for your tenants?
Gareth Townley, Managing Director, Eaton Towers Ghana:
By African standards Ghana has a good grid and there are plans for significant investment in power generation. But at the moment we are experiencing load –shedding and I am spending half my time dealing with power issues - I don’t know what towerco execs in Europe do all day when they can just plug in to the 24 hour mains electricity grid!
I don’t know what towerco execs in Europe do all day when they can just plug in to the 24 hour mains electricity grid!
We’re having a blip at the moment but I’m positive for the future. Hopefully we can remove diesel element from half the sites – previously the average downtime for the grid in Ghana was two to three hours a day and our battery back-up can cope with that. The reduction in diesel use is also good for meeting the environmental targets, as green initiatives are important to the Eaton Towers Group.
TowerXchange: How are network planners in Ghana adapting to a market where almost all of the towers are leased not owned?
Gareth Townley, Managing Director, Eaton Towers Ghana:
They prefer it! I come from the operator side and I know that once you’ve planned a rollout, it can take another 9-12 months to build a tower. Now they can reach new areas more quickly and just need to check if a tower is ready and be online in a matter of weeks. From a capex point of view too the operator only needs to fund the active electronics and they are generating revenue from day one.
