Energy innovation and portfolio expansion at Towerco of Madagascar

Towerco of Madagascar (TOM), a subsidiary of Groupe AXIAN, headquartered in Madagascan capital, Antananarivo, is the leading towerco in Madagascar and expects to have a portfolio of over 1000 sites in the country by the end of 2017. Groupe AXIAN has further extended its presence into the Indian Ocean region, managing portfolios of towers in Comoros, La Reunion and Mayotte and has an appetite for further tower portfolios across the continent. TowerXchange speak to TOM’s General Manager, Gilles Kuntz, to discover more about the company’s expansion and how they are are improving operating efficiencies and driving down costs to improve their service to their clients.

TowerXchange: TowerXchange last interviewed Towerco of Madagascar back in 2013, please can you provide an update on what the company has been up to since then? 

The company is part of the Groupe AXIAN, owned by Hassanein Hiridjee, which also includes TELMA (the number one operator in Madagascar) and EDM, the national electricity company.

Towerco of Madagascar itself is now five years old, celebrating its birthday in October. Our portfolio of sites in Madagascar reached a total of 900 by the end of 2016 (approximately 55% of the total towers in the country) through both the deployment of new sites for operators in the market and through the acquisition of Madamobile’s towers during the liquidation process following the collapse of the operator in early 2013. We have all three MNOs in the market (TELMA, Orange and Airtel) as tenants on our sites, with TELMA, our sister company, being on 90% of sites. Despite a low tenancy ratio currently, we foresee this increasing significantly in the future.

In addition to its presence in Madagascar, Groupe AXIAN has also been expanding its presence in the Comoros, Mayotte and La Reunion strengthening its position in the region and expanding its portfolios of assets.

TowerXchange: Can you explain some of the dynamics in the Madagascan telecoms sector and what growth opportunities TOM forecast.

Madagascar is experiencing significant economic and political challenges and is still one of the poorest countries in the world. In order to address the country’s challenges, one of the main objectives of the Ministry of Post, Telecommunications and Development of Numeric is to improve connectivity throughout the country and though that to support the local economy, education and access to improved numeracy for all. With this in mind, we foresee strong growth in the telecoms sector in spite of the macroeconomic issues the country is facing.

The Groupe AXIAN remains committed to working with government to alleviate many of the difficulties in the country. TELMA is currently deploying 4G and optical fibre and after resolution of some issues surrounding backbone, Orange will also be following suit shortly. This presents a big area of opportunity for TOM to get involved in these activities.

We have been through the budget planning processes with each of our customers (Orange, Airtel and TELMA) for next year to pursue our expanding growth and to allow the development of the industry

TowerXchange: Are there still significant coverage gaps in Madagascar?

There are still significant areas to cover. In terms of population, around 80% of the market is covered. It is unlikely that we will reach 100% geographical coverage for a very long period of time with much of the country being sparsely populated, as such, the economics of bringing coverage to certain areas don’t stack up.

TowerXchange: In addition to build to suit strategies for each of the MNOs in Madagascar, do you foresee opportunities for inorganic growth through the acquisition of tower portfolios?

TOM is very open to new acquisitions and has been engaged in a number of active discussions both in and out of Madagascar. We have an appetite for not only tower portfolios in Madagascar but also the Indian Ocean and Africa.

TowerXchange: You mentioned previously that TOM has started operations outside of Madagascar, can you provide more information on this expansion. 

Our parent company, Groupe AXIAN, recently acquired the mobile branch of Outremer Telecom in La Reunion and Mayotte and was also recently awarded the second mobile license in Comoros. TOM has taken over all the tower engineering and infrastructure work for the group in Comoros including the design and specifications of new sites. We also defined all the maintenance terms of the towers, including the energy component, to accompany and support the new team in place.  Whilst this brings an additional number of towers for the Group, TOM as the towerco is not directly engaged in the operations as there are no plans actually to share infrastructure, therefore little co-location potential.  We however aim to further develop TOM’s position in these markets should any strong opportunity arise for further growth.

TowerXchange: With all this growth, how has the size of the TOM team grown?

TOM has grown significantly in terms of the team size and has strong teams in place from the operational and technical level to financial and legal experts. We are fully developed in terms of process excellence, and have a strong focus on budgetary control. We employ around a hundred people directly but through all our partners we contribute to more than 3,000 indirect jobs in Madagascar.

TowerXchange: On the operational side of the business, can you share with us details of recent projects designed to improve the operational efficiency of your network?

We have been particularly focused on providing a wealth of different energy solutions to our customers. You may have seen our initiative that we submitted a nomination for the Green Initiative of the Year category in the 2016 TowerXchange Industry Awards in conjunction with Wind IT.  We have deployed the first prototype on the continent of a tower with an integrated wind turbine which will power the site in conjunction with batteries and some hybridised solar. Wind IT built the first prototype in France and have won a number of awards for their system. It is not a typical wind turbine, rather up to four vertical shaft turbines can be accommodated into the tower structure, generating up 6kWh in production. This is a revolutionary design and we have invested in this pilot to launch the first proof of concept and pilot in Madagascar; if it proves to be successful we will launch more of these tower sites. The technology should reduce opex and the interesting thing is that the capex is about the same as traditional towers and energy solutions. Reducing opex whilst bringing real environmental savings is a real advantage. It has been a fantastic project to work on and we expect in to be completed by the end of the year.

TowerXchange: Is this part of a broader initiative to reduce energy costs and carbon emissions?

As a company, we are very aware of our costs, in particular energy, where we are working hard to reduce opex. We have built a large NOC which oversees all our site monitoring capabilities from fuel consumption and DG runtime to battery usage in order to improve costs and reliability to customers.

We have been examining a number of different solutions and working closely with all of our partners. One of the reasons for us attending TowerXchange in Johannesburg was to meet with companies who can help with reducing the cost of power and reducing our carbon emissions. We have been doing a number of trials, we are looking at renewable energy and new batteries, examining maintenance levels required and what impact they have on the environment. We have also been doing a number of trials for rooftop as well as ground based sites. We see all energy equipment manufacturers and providers as our partners and I am really looking for innovative solutions to improve costs.

As a towerco one of main missions is to not only provide space but also energy to our customers. We see ourselves as energy producers and are looking at how we can improve power availability and site uptime, as well as the ability to extend quickly when customers want to increase capacity. Our sites each have their own unique features and power systems must be designed accordingly.