To date, 99% of the Middle East’s towers sit in the hands of the region’s MNOs with very little infrastructure sharing happening between operators. TowerXchange take a look at why this has been the case and what is starting to change, examining key developments in the market in 2017.
Although the Middle East and North Africa (MENA) region has a number of multi-country operators (Etisalat, Zain, Ooredoo, STC) who have operations in markets where tower sharing is a common practice, they have been reluctant to share their infrastructure in their home markets.
It is believed that tower sharing had not become popular in the Middle-East since operators have enjoyed high liquidity and ARPU, and have relatively easy operations driven primarily by site accessibility and readily available grid power. Furthermore, operators continued to believe that the competitive advantage provided by unique coverage outweighs the benefits of tower sharing, especially for incumbents faced with the advent of second and third licenses over the past 15 years.
However, as telecom operators now face new competition from OTT players, as well as having to continually increase their network capacity and acquire new technologies in order to keep up with high demands driven by exponential data growth, the rationale for sharing telecom infrastructure has become compelling. The MENA region is experiencing a mindset shift on more than one level. Multiple operators are in final discussions on tower divestment deals. In some markets, the regulators are encouraging mobile operators to share infrastructure, whereas, in other markets the regulators are mandating infrastructure sharing at least with respect to new towers.
Capgemini Telecoms estimates that tower sharing could help mobile operators in the Middle East achieve total savings of $8bn within five years, with savings resulting primarily from a reduction in capital expenditure and operating costs. Passive infrastructure continues to make up the bulk of a mobile operator’s capital expenditure, and is a substantial part of its ongoing operating expense.
Towershare, a company headquartered in Dubai and managed by a team which previously ran one of the leading telecom equipment vendors in the region, is leveraging its strong relationships with the operators to help them to unlock the value in their passive network, through infrastructure sharing. Towershare is the region’s leading independent owner and operator of wireless communication tower infrastructure focusing primarily on the MENA markets.
Towershare commenced its operations in Pakistan in 2014 and grew its portfolio organically and through acquisitions to approximately 700 towers and secured the acquisition of an additional 13,000 towers before concluding the sale of its business to edotco to focus efforts on the MENA region. Recently, Zain announced that a joint venture between Towershare and IHS Towers is in exclusive discussions with Zain to acquire over 8,000 towers in KSA, in addition to the exclusivity to Towershare to acquire 1,600 towers in Kuwait.
Capgemini Telecoms estimates that tower sharing could help mobile operators in the Middle East achieve total savings of $8bn within five years
A snapshot of Middle Eastern tower sharing initiatives in the public domain
Zain enters exclusive negotiations with Towershare in Kuwait and a consortium involving Towershare and IHS Towers in KSA
IHS Towers is Africa’s largest towerco with a portfolio of approximately 23,000 sites split across Nigeria, Rwanda, Zambia, Cameroon and Cote d’Ivoire. Entrance into the Saudi Arabian market through their partnership with Towershare would mark their sixth country.
Potential KSA towerco JV formation between Saudi Telecom Company and Mobily on pause
In August 2016, Saudi Telecom Company and Mobily commenced a three month pilot to explore the formation of a potential joint venture. After having extended the pilot study and issued an RFP for an advisor, the joint venture appears to now be on hold. Read “Mobile market dynamics, tower transactions and joint ventures in Saudi: where are we now?” for further insights.
MCI, Rightel and Fanasia form tower joint venture in Iran
Number one and number three MNOs in Iran have announced the formation of a tower joint venture involving domestic towerco, Fanasia. For more information on the joint venture, read our article with MCI’s CTO, Morteza Taheribakhsh.
