Millicom, operating as Tigo, has a footprint in five African countries (following the sale of their subsidiary in the DRC to Orange which was completed in April of this year). In both Ghana and Tanzania, Millicom has entered into a joint venture with Helios Towers Africa, whereby Millicom retains a 24% stake at group level which they are now looking to monetise. We speak to Tigo Tanzania’s Head of Procurement and Supply Chain to understand procurement within the Millicom group and how this function is managed with towers outsourced to Helios Towers Tanzania.
TowerXchange: Please can you provide an introduction to the size and shape of Millicom’s tower portfolio in Tanzania?
Martin Black, Head of Procurement & Supply Chain, Millicom:
In Tanzania, Tigo entered into a joint venture with Helios Towers Tanzania (HTT) for HTT to manage their portfolio of 1,020 towers, with Millicom retaining equity in the newly formed joint venture. In addition to the tower contracts that we have with HTT, we also have co-location agreements with other operators to use their sites. Tigo Tanzania also has a small quantity of their own sites (roughly 200) which we have built and now manage ourselves, however the long term strategy would be that we would also have these managed by a third party.
TowerXchange: Please can you describe the procurement function at Millicom and where you sit in the company?
Martin Black, Head of Procurement & Supply Chain, Millicom:
Major procurement contracts are negotiated at the group level by Samuel Tanon - he is effectively the commodity manager for towers who sits in head office. For products and services which are used across all our geographies it makes sense to handle these decisions centrally. These procurements are then applied locally.
My role covers procurement and implementation of group procurement for Tigo in Tanzania with an operational focus. On the local level we will make recommendations which if appropriate are then approved at global level. With some major projects there will be a top down approach whereby the group level makes a recommendation, but on a day to day basis the local team will take the lead.
Whilst my role solely covers Tanzania, there is a degree of cross-pollination of ideas between the different opcos whereby we offer guidance and recommendations to our counterparties.
TowerXchange: Having outsourced the majority of your towers to Helios Towers Tanzania how is that relationship managed and what other key service providers do you have in place for other sites?
Martin Black, Head of Procurement & Supply Chain, Millicom:
The day to day relationship with HTT is managed at the local level, however with Millicom being a shareholder in Helios Towers Africa there are also meetings with Helios at the board level.
In Tanzania, Tigo have appointed Huawei as our managed service provider and Huawei carry out the first level monitoring and analysis of network performance and prepare the associated data for us.
Our Class A sites (effectively our main switch sites) are not part of HTT’s responsibility. These Class A sites are dealt with very differently as they are our critical sites at the heart of the network. We have appointed Sincro Sitewatch to maintain these sites for us and thus hold separate meetings with Sincro Sitewatch to review their performance. Sincro also maintain our solar sites which are our low cost sites in rural areas and so the company maintains our sites both the upper and lower end of the spectrum.
With each of our managed service providers we have long term contracts in place. I have a contact manager in place who is responsible for contract management and supplier relationship management of Huawei, HTT and Sincro.
TowerXchange: American Tower are set to enter the market following their recent acquisition of Airtel’s Tanzanian tower portfolio. Do you foresee American Tower becoming a key service provider for Tigo?
Martin Black, Head of Procurement & Supply Chain, Millicom:
The transaction between Airtel and American Tower is yet to close and until it does, American Tower does not feature in our plans. Whilst we have a limited portfolio of around 200 towers that could be part of a sale and leaseback arrangement with ATC, I believe these do not constitute a big enough reason for ATC to enter Tanzania without the Airtel towers and so we need to wait on that transaction.
TowerXchange: Can you explain a little about power supply to your sites and the role that Tigo play in deciding this?
Martin Black, Head of Procurement & Supply Chain, Millicom:
Historically grid supply in Tanzania has not been consistent enough to support the high levels of customer experience Tigo wants to deliver. Some sites are off-grid entirely and as such, generators are required on most cell sites. Tigo have used solar power with backup batteries as the primary power source in the majority of the 200 sites which Tigo have built independently as these are rural sites with no grid power.
The procurement of diesel generators is done on a continuous upgrade cycle based on running hours, analysis of maintenance costs, and any changes in requirements. Whilst we monitor this on our own sites; HTT have ultimate responsibility for managing their sites that we use.
Our sites built in rural areas (in conjunction with the government) do not have access to the grid and what’s more, it is not practical to have diesel generators on these sites. As such they have been designed with solar combined with battery back-up as the power source. Grid power is now being rolled out to some of these sites and, where possible, we will look to connect to the grid so that we have backup power sources.
On our Class A sites, we have very robust power systems in place with a power manager appointed to oversee the systems, on each site two subcontracted technicians are deployed 24/7. At these sites we have grid power plus two diesel generators and batteries in place but no renewables yet.
On our Class A sites, we have very robust power systems in place with a power manager appointed to oversee the systems, on each site two subcontracted technicians are deployed 24/7. At these sites we have grid power plus two diesel generators and batteries in place but no renewables yet
TowerXchange: Particularly in remote areas, have you considered installing larger power generation sources to power the communities surrounding the tower?
Martin Black, Head of Procurement & Supply Chain, Millicom:
The concept regarding electrification of rural communities around sites has been considered however there are a number of challenges surrounding the model.
One issue for a mini grid deployment is that you need to have everything in a very tight area to make it work, you need to have the village very closely located to the tower and not too spread out, otherwise your losses in distribution are too great. Prioritisation of supply would also be an issue - should a mobile operator, a school or a local doctor have priority on what will at times be a limited supply of power? If there was a large power consumer nearby that would be a different model which could work, but in rural areas there tends to be low power consumption.
TowerXchange: What kind of monitoring systems do you have in place?
Martin Black, Head of Procurement & Supply Chain, Millicom:
Our managed services supplier Huawei runs our network operation centre and has an overall view of the network. In addition Sincro has a cloud based system which we (Tigo or Huawei) can interrogate and pull reporting from any time. HTT are in the process of deploying a more traditional RMS system which is part of on an ongoing upgrade project. The HTT and Sincro systems both interface with the Huawei-run network operations centre.
TowerXchange: You will be joining us once again at the TowerXchange Meetup in Johannesburg, what are some of the reasons that you will be attending?
Martin Black, Head of Procurement & Supply Chain, Millicom:
I am keen to hear more about strategies that other companies are following when it comes to network and supplier management in order to keep our performance management ahead of the curve.
I am also interested to hear about new technologies - any major breakthroughs or anything particularly innovative that suppliers are working on (although I have to admit after a number of years in procurement I am fairly cynical about any major breakthroughs). I am also interested to keep abreast of transaction activity in the region and who is buying who. It is a very volatile market, with Tanzania potentially about to change significantly.
