Over 30 tower transactions of scale have been completed in the Sub-Saharan African market and towercos now own 62,990 (39.9%) of the region’s estimated 158,359 towers.
The first edition of the TowerXchange Journal for 2020 sees the completion of 2019’s biggest deal. Announced on the 2nd January, American Tower secured the necessary regulatory approvals to close its acquisition of Eaton Towers. Eaton Towers’ sites were eventually valued at a little over US$325k per tower, however that overstates the per tower valuation as American Tower has also acquired a substantial build-to-suit pipeline. In the seven months since the deal was announced around 200 sites were built by Eaton Towers with a similar pace of build to continue for several years as networks continue to expand, especially in Kenya and Uganda. And in contrast with recent years which saw muted new build, American Tower is stepping up the pace in Nigeria. American Tower may end 2020 with a thousand sites more than it started simply through organic growth.
With the deal, Africa’s big four become a big three. However, things don’t stay still for long in Africa, and a new challenger to the continent’s towercos has emerged by flipping the towerco’s normal logic and focusing on rural sites. Africa Mobile Networks (AMN) has emerged as the key enabler or Orange and MTN’s rural rollout programmes, and is fully funded for its first 2,000 sites with the two MNOs in ten countries. These 2,000 sites should be completed by mid-2020 and would make AMN Africa’s fourth largest towerco, ahead of South Africa’s Atlas Tower (now owned by SBA Communications) and Nigeria’s Pan African Towers. The focus on rural sites, and offer of a revenue shares over traditional tower leases sets AMN apart from other towercos, but the lightweight sites, low-power OpenRAN base stations and reliance on solar power are becoming the standard approach for rural sites. Rural sites were a hot topic at TowerXchange Meetup Africa last year, and AMN’s 50% EBITDA and rapid growth helps explain why.
ESCOs have also in serious contention with towercos for tower power management, with Orange’s transfer of power management across Africa almost complete and MTN turning to ESCOs to solve its power management issues of the 13,000 sites it retains across Africa. Vodacom is also looking to ESCOs to solve its power management headaches in South Africa with an RFP live and discussions ongoing. Our ESCO Roundtable will be taking place in Casablanca on the 23-24 March in partnership with Orange to help solidify the ESCO market as a key sector in African telecoms. Tying together ESCOs, MNOs, investors and suppliers the event will explore every aspect of the ESCO business model, as well as be a place for one-to-one meetings for the burgeoning sector.
Vodacom is exploring an ESCO deal in South Africa because of the deterioration of its power grid, and state monopoly ESKOM. Recent changes to legislation have enabled miners to generate their own power which opens the way for distributed generation and will make life easier for any ESCO which establishes itself in South Africa. In addition to looking at its ESCO options, Vodacom is going ahead with a 2020 5G roll-out in an innovative relationship with Liquid Telecom. Liquid Telecom has highly sought after spectrum in the 3/5GHz band which will be used to deploy 5G. The 3.5GHz band has low propagation and a 5G roll-out using this will therefore require densification, providing a fillip to demand in South Africa which could otherwise be constrained by spectrum shortages and Cell C’s poor financial health.
TowerXchange provides a country by country analysis of tower ownership and market dynamics across 23 of the more active tower markets in sub-Saharan Africa.
Country Overviews
Angola
Subscribers: 14.6mn*
Towers: 3,318
MNOs: Two (plus entrance of Angola Telecom and another MNO imminent)
Towercos: ANTOSC
* Source: GSMA Intelligence
Angola has two MNOs, Unitel and Movicel with Unitel having around about two thirds of the market share in terms of subscribers and Movicel the other third. Unitel has the larger portfolio of towers, possessing 1,800 sites and Movicel is a relatively young network with just 800 sites. In order to reach the level of coverage they are targeting, Unitel needs to add a further 1,000 sites and Movicel a further 2,000. Unitel’s dominance and thus lack of sizeable competition in the market means that it hasn’t had the impetus to invest in its networks but change is on its way.
In late 2017, fixed incumbent, Angola Telecom was awarded a ‘Unified Global’ communications license (covering all mobile, fixed voice, data and TV services). The company is spending US$12.6mn to roll-out 4G in five provinces prior to privatisation. A fourth licence was briefly issued to Telstar, before being torn up and a new competition launched. Despite prior rumours, Vodacom is unlikely to take the fourth licence if reissued, as Vodafone has now partnered with Movicel.
Whilst infrastructure sharing to date has been limited, a new law came into force in 2016, prohibiting the construction of a new site in close proximity to an existing one. Such legislation will necessitate infrastructure sharing going forward. ANTOSC are Angola’s first independent towerco and have built 18 sites already and the towerco expects to have around 400 sites within three years.
Grid infrastructure in the country is poor with 85% of sites understood to be operating on diesel generators. Unitel in particular have put a lot of focus on renewables, looking at solar hybrid systems on a number of their sites whilst ANTOSC have deployed DG battery hybrids on the first wave of towers they have rolled out.
Figure 1: Tower ownership by Africa’s four largest independent towercos
Burkina Faso
Subscribers: 20.0mn*
Tower count: 2,374
MNOs: Three
Towerco activity: American Tower
ESCOs: Aktivco
* Source: GSMA Intelligence
There are three MNOs in Burkina Faso; with Onatel (part of the Maroc Telecom group) having 38% market share, Orange (which acquired Airtel’s opco in the country) having 46% market share and third placed, Telecel with 16%. 3G was launched in the country in 2013 and 4G trials were begun by Onatel and Orange following the introduction of a new licencing region. However, mobile broadband penetration still sits at only 37%, with the overall mobile penetration rate hovering around 100%.
As of January 2nd 2019, American Tower acquired Eaton Towers and all its sites within Burkina Faso. Prior to their opco being acquired by Orange, Airtel sold their towers to Eaton Towers which acquired a portfolio of nearly 700 sites on which Orange is now the anchor tenant. Omatel has the largest portfolio of towers in the country, at approximately 1,000 sites. Telecell owns around 550 towers.
Eaton Towers had engaged in some decommissioning and build-to-suit, with American Tower announcing the acquisition of 670 towers, but its primary investment in Burkina Faso had been in upgrading the energy assets it inherited from Airtel. Orange also reports that it leases space on just over 100 towers owned by the other MNOs whilst retaining a portfolio of around 100 sites. In July 2018, Orange signed a ten-year ESCO agreement with Camusat’s Aktivco, and whilst the number of sites this covers has not been disclosed, TowerXchange estimate this to be around 500 (including non-tower sites).
Cameroon
Subscribers: 23.6mn*
Tower count: 3,297
MNOs: Four
Towerco activity: IHS Towers, Africa Mobile Networks
* Source: GSMA Intelligence
There are four MNOs in Cameroon; MTN, Orange, state-owned CamTel and Viettel-owned Nexttel. In September 2017, Afrimax (which traded as Vodafone Cameroon) had its license revoked and ceased operations in the country. IHS Towers owns or manages a portfolio of 2,220 sites having acquired towers from MTN and entered into a management with license to lease (MLL) contract with Orange. Orange manage 100 sites of their own outside of their arrangement with IHS Towers, but have also recently started working with Africa Mobile Networks. AMN, a low cost rural-specialist which offers revenue shares and opex-based site leasing, have 225 sites active in Cameroon and another 120 planned, with both Orange and MTN.
Chad
Subscribers: 5.7mn*
Tower count: 2,000
MNOs: Three
Towerco activity: None
ESCOs: Aktivco
* Source: GSMA Intelligence
There are three MNOs (Airtel, Maroc Telecom and Sotel) and an estimated 2,000 towers in Chad, a country where electrification sits at just 4%. Tigo sold their Opco to Maroc Telecom in July 2019.
Airtel had previously agreed the sale of their towers to Helios prior to the transaction being cancelled because of an unfavourable regulatory environment.
To address power issues, Millicom’s Tigo has signed an ESCO contract in the country with Camusat’s Aktivco. Millicom are looking to exit the African market, with Econet reported to have expressed an interest in acquiring their remaining opcos in Chad and Tanzania.
Figure 2: MEA’s biggest tower transactions to date
Congo Brazzaville
Subscribers: 5.1mn*
Tower count: 800
MNOs: Three
Towerco activity: Helios Towers, Africa Mobile Networks
* Source: GSMA Intelligence
There are three mobile network operators in Congo Brazzaville, all of which are backed by regional players. MTN Congo and Airtel Congo compete with the much smaller Bintel-owned Equateur Télécom (trading as Azur Congo). Airtel had a 3G monopoly for nearly two years until MTN launched its own 3G service in August 2013 and 4G in December 2016.
Negotiations to sell Airtel’s Congolese opco to Orange lapsed, but MNO consolidation is not a new phenomenon in Congo, Airtel having acquired Warid’s operation in the country in 2014 vaulting them over MTN to become market leaders.
Helios Towers Africa is the sole traditional towerco in Congo Brazzaville, having closed a deal to acquire Airtel’s 384 towers, representing 49% of the country’s towers. Around half of Helios’ sites are reported to be off-grid, with power availability of on-grid sites averaging 15 hours a day. A new rural-specialist towerco, Africa Mobile Networks, has plans to build 60 low-cost rural sites for Orange.
Cote d’Ivoire
Subscribers: 34.1mn
Tower count: 4,271
MNOs: Three
Towerco activity: IHS Towers
ESCO activity: Aktivco
* Source: GSMA Intelligence
IHS own or manage a portfolio of 2,720 towers, having acquired sites from MTN and entered into an MLL arrangement with Orange. Number three MNO, Moov still retains their tower portfolio which numbers about 1,000 sites.
The regulator had previously revoked the operating licenses of smaller operators Comium, Cafe Mobile and GreenN in the market before awarding and then subsequently revoking a license from LPTIC (GreenN’s backer). There are understood to be about 400-500 sites which were previously owned by the different parties, with a significant degree of parallel infrastructure.
Overall estimations suggest that the market needs a further 2,000 towers to be added between all operators within the next three years. With regards power, Orange has recently signed an ESCO agreement with Camusat’s Aktivco whilst IHS has invested heavily in upgrading energy equipment, with over 70% of its sites now equipped with solar hybrid solutions.
Figure 3: Tower ownership in Cote d’Ivoire
DRC
Subscribers: 35.1mn*
Towers: 4,513
MNOs: Five
Towercos: Helios Towers, Africa Mobile Networks
ESCOs: GreenWish Partners (and Sagemcom)
* Source: GSMA Intelligence
Since Orange acquired Tigo in 2016, there are five MNOs in the DRC; Vodacom, Airtel, Orange, Supercell and Africell, with Smile planning to launch 4G services.
Helios are the country’s only traditional towerco having acquired first Millicom’s and then Airtel’s towers. The Millicom deal involved the operator retaining a 40% stake in Helios Tower DRC which they then restructured to a 24% stake at group level (a stake they may have monetised during Helios’ recent IPO). Helios’ acquisition of Airtel’s 950 sites spurred a major decommissioning program, involving the removal of 150 duplicated sites. Helios have also built well over 100 new sites in the country and recently finished two new backbones, one for Vodacom and one for Orange, of a combined 1800km in length. Helios are also planning a third 500km backbone for another MNO. The towers, each 80-100m tall and 40km apart, will add significant capacity to existing satellite connectivity in the area.
With around 4,513 towers serving 35.1mn connections, DRC has one of the highest number of SIMs per tower in the world, and with only 25% of the population having a mobile phone and 50% of the population living in an area with mobile coverage, the potential for growth is huge.
Grid power is reasonably reliable in Kinshasa, but less reliable in Lubumbashi and Goma. Almost all sites outside these three cities are off-grid and the delivered cost of diesel can be 2.5x more expensive in rural areas, with Helios’ average cost of diesel per tower over double that in its other markets. 55% of Helios’ towers are off-grid and with such high cost of fuel, the case for solar is strong. Helios has deployed solar at 430 sites in the DRC, with solar investments generally delivering a three to four year payback.
Orange signed an ESCO contract for 280 initial sites with GreenWish Partners, a contract since taken over by GreenWish partners’ Sagemcom. MTN have signed a deal with Africa Mobile Networks (AMN) to build 520 sites by mid-2020. 220 sites are currently active. A key supplier to MTN’s rapid rural rollout programme, AMN are providing lightweight, low power, solar+battery sites on a revenue share and opex basis to serve rural areas.
Figure 4: Estimated tower counts for selected countries in SSA
Figure 5a: Towerco footprints in sub-Saharan Africa
Figure 5b: Single-country towercos
Ethiopia
Subscribers: 46.7mn*
Tower count: ~8,000
MNOs: One
Towercos: None
* Source: GSMA Intelligence
The reforming government of H.E. Abiy Ahmed has announced a privatisation of Ethio Telecom, one of the world’s last monopoly telecoms operators. TowerXchange understands that the carve-out of its ~8,000 towers is being considered, with a sale and leaseback or partnership arrangement possible. A possible step could see Ethio Telecom split into an infrastructure division and a services division, before a further two telco licenses are issued in the country of 108mn. An independent telecoms regulator has already been established to oversee the issuance of the licences, with a further mandate to encourage infrastructure sharing.
Although long a telecoms laggard, a surge in investment from 2013 onwards saw 3G coverage expand from below 30% to around 66% today and 2G to 85%. Further expansion of the network stalled due to a lack of debt capacity by the Ethiopian state to finance further investment. Ethiopia’s grid is unreliable and many sites are off-grid, so there is significant demand for energy management for cell sites within the country. Any tower sale would be the first step in a substantial programme of build-to-suit to infill the network and expand geographic coverage.
MTN, Safaricom, Vodacom, Econet and Orange stated an interest in the Ethiopian liberalisation opportunity and some have small offices already established in Addis Ababa. At least three independent African towercos are also known to have established a presence in the country and to be exploring opportunities. A large majority of Ethio’s sites use Huawei equipment, but both ZTE and Ericsson also work with Ethio.
Gabon
Subscribers: 3.0mn*
Towers: 1,000
MNOs: Two
Towercos: None
ESCOs: Energy Vision
* Source: GSMA Intelligence
There are two MNOs in the market since Gabon Telecom merged with Moov to create the country’s largest operator ahead of Airtel. Financial pressures forced the total closure of Bintel’s Azur. Airtel is deploying LTE, but mobile broadband penetration is still only 24% at the end of 2018, with cities well covered but rural areas still underdeveloped.
Airtel’s efforts to monetise their towers in Gabon never made much headway, so all the country’s towers remain MNO captive for the time being.
Whilst the electricity grid in the main cities is okay, the grid is much less extensive in more rural areas leading to 30-35% of the country’s ~1,000 sites being off-grid. Energy Vision signed the first real ESCO contract in Africa with Airtel, offering power on a fixed monthly price with no upfront capex. The project encompasses a full solar hybrid system with CDC batteries and is in the process of being extended to cover 500 sites (of which 40% are off grid, 10% are on unreliable grid and 50% are on grid). Energy Vision has also been awarded responsibility for all passive elements of the sites, with a view to extend this to sites on unreliable grid.
Ghana
Subscribers: 39.9mn*
Towers: 6,749
MNOs: Eight
Towercos: American Tower, Helios Towers, African Towers, Pan African Towers
* Source: GSMA Intelligence
Ghana has a crowded MNO landscape with eight MNOs since 2017’s merger of Airtel and Tigo. MTN leads the market, followed by AirtelTigo and third placed Vodafone. The NCA has formally notified Expresso of its intent to terminate the company’s license, with the authority also issuing a similar threat to Glo (both operators having less than 3% market share). The MNOs are joined by three LTE only players – Surfline, Blu and Busy.
There are now two major towercos active in Ghana after a series of five tower transactions, including the acquisition of Eaton Towers by American Tower. In 2010, Helios Towers set up a joint venture with Tigo as minority partners into which 831 towers were transferred (Tigo has since restructured their stake in the joint venture to a shareholding at Helios’ group level, a stake which can now be monetised, following IPO, if Millicom wish). Shortly afterward Eaton Towers closed their deal with Vodafone Ghana, then American Tower set up another joint venture with MTN to which 1,856 towers were transferred (American Tower is currently in the process of acquiring the 49% stake MTN retained in the JV). In 2015 Airtel sold its towers to Eaton. In addition to the three large towercos, towerco Pan African Towers has 300 sites in the country and African Towers has also built a portfolio of 150 macro sites as well as has installed DAS at around 50 different sites including major airports.
Whilst grid coverage and availability is good by African standards (with one towerco reporting over 95% of sites to be on-grid and availability trending towards 20 hours a day), electricity prices have skyrocketed in the past year meaning that the business case for solar and hybrid is strengthened and the use of deep cycle batteries is growing.
Figure 6: Ownership of Ghana’s towers
Kenya
Subscribers: 52.9mn*
Towers: 7,625
MNOs: Two**
Towercos: Atlas Tower, SEALTowers,American Tower
* Source: GSMA Intelligence
There will soon be only two major MNOs in the Kenyan market, Safaricom and Airtel-Telkom, following the announcement of a merger of the number two and three MNO. As of Q4 2018, Airtel-Telkom – pending regulatory approval – will have 32.4% of Kenya’s subscribers, behind Safaricom’s 63.3% (Source: Communications Authority of Kenya).
Eaton Towers entered the market following the acquisition of Airtel’s sites and had a portfolio of 1,320 sites in the country after some build-to-suit additions. Telkom Kenya sold 715 towers to American Tower in a sale and leaseback deal which closed at the end of 2018. In early 2020 the transaction acquiring Eaton Towers successfully closed.
TowerXchange have also been made aware of a new towerco, SEALTowers a start-up focussed on low cost compact tower site solutions and hybrid power innovations, and which expects to have 500 sites. We also understand Atlas Towers have entered the market.
Figures are unavailable for American Tower, but macro towers predominate in Eaton’s portfolio, with only around 4% of sites on rooftops, and only a low double digit deployment of in-building solutions. Around 500 buildings are suitable for DAS with a hundred or so covered already; Safaricom are currently operating shared DAS networks.
Post Eaton acquisition, American Tower owns 2,069 of Kenya’s 7,625 towers, Safaricom owns and operates almost all of the rest, and Telkom retaining somewhere between 40-80 towers based in secure compounds or used for transmission. Hundreds of Eaton and American Tower sites are within 500m of one another which will be managed by American Tower as it helps rationalise the sites ran by Airtel-Telkom.
Kenyan build-to-suit will suffer somewhat relative to pre-Airtel-Telkom merger forecasts. Following the announcement of the merger, Telkom cancelled its planned new towers for 2019, except for emergency builds to fix outages. However, Airtel will continue with its pre-merger planned expansion of around 250 new sites, and with the Eaton acquisition, American Tower will be fulfilling these, partially compensating for the delay in new Telkom sites. Safaricom is still on course for roughly 500 new 3G and 4G sites each year. Safaricom has a live ESCO RFP for ~1,200 sites.
Figure 7: Ownership of Kenya’s towers
Madagascar
Subscribers: 9.1mn*
Tower count: 2,310
MNOs: Four
Towercos: Towerco of Madagascar
* Source: GSMA Intelligence
Telma, Orange and Airtel operate in the Madagascan market with Blueline the country’s newest MNO. Telma launched 4G operations in 2015, with Orange and Airtel following in 2017; 4G rollout is still under way to extend coverage across the country. Towerco of Madagascar (TOM), initially spun out of Telma but now an independent towerco in its own right, operates a portfolio of 1,200 sites in the country, 55% of Madagascar’s total towers.
Madagascar represents one of the few markets where Airtel still retains its towers, with the MNO owning a portfolio of 500 sites in the country. There had been rumoured interest in an acquisition of Airtel’s towers, followed by reports that the MNO had signed an ESCO contract, although TowerXchange understands that the opco has decided not to pursue this, instead favouring a review of its managed services contract to bring down costs.
Orange also issued an ESCO RFP in the Madagascan market, although it has since been withdrawn.
The operational challenge of operating a distributed tower network, particularly during the rainy season is not for the feint hearted, and with significant energy challenges in the country, (Airtel report that 50% of its sites are off-grid) TOM has been extensively evaluating a number of different energy options including a pilot of a wind project in the country.
Figure 8: Tower ownership in Madagascar
Malawi
Subscribers: 8.6mn*
Tower count: 1,000
MNOs: Three
Towercos: None
* Source: GSMA Intelligence
There are three MNOs in the Malawian market – Airtel, TNM and Afrimax Malawi. Airtel reached an agreement to sell their towers to Eaton back in 2015 but the deal was cancelled with no signs of returning.
TNM is currently undergoing a project to rollout over 200 towers across the country. TNM launched 4G services in 2016 with Airtel launching in early 2018. Afrimax Malawi currently only targets enterprise customers, but is mulling a tower build programme of roughly 200 sites for 2020, depending on acquiring outside financing.
Mozambique
Subscribers: 15.3mn*
Tower count: 4,400
MNOs: Three
Towercos: None
* Source: GSMA Intelligence
There are three MNOs in Mozambique, Tmcel, Vodacom and Viettel’s Movitel. The entrance of a third MNO Movitel back in 2012 caused a radical shakeup of the telecoms sector with the Vietnamese-owned operator rapidly deploying their network and securing 49% of the mobile subscriber market share by the end of 2015.
The country has an estimated 3,000 foundation-based towers, supplemented by an additional 1,800 guyed masts (primarily owned by Movitel). Fibre rollout to the tower has been relatively extensive, resulting in microwave backhaul dishes being removed from sites, thus freeing them up for further active equipment.
Infrastructure sharing in the country has been limited, with a just an estimated 50 towers being shared between Tmcel and Vodacom. The government passed a first reading of a bill mandating infrastructure sharing in November 2015, however talks have stalled. The government has however been putting pressure on operators to share infrastructure in rural areas to meet the country’s universal service access goals, in a country where 68% of the population lives in rural areas.
State-owned mCel had long standing debts and appointed Barclays to oversee the sale of its ~1,000 towers in order to reduce leverage. In July 2016, it was announced that mCel would be merged with fixed line incumbent TDM to create a single more sustainable entity and discussion around a tower sale seemed to fall by the wayside, the merger was completed in Q1 2019. In January 2020, TMCEL announced plans to raise US$200mn for network expansion projects.
There had also been speculation of a potential tower sale at Movitel although a formal process was never announced. Rumour has it that the entrance of Movitel into the market was part of a government plan to expand network infrastructure and then sell the assets. If this were the case, the decision to sell may be more likely to come from FRELIMO than Viettel.
As to who the likely bidders would be in a Mozambique tower sale from either Tmcel or Movitel, it is not yet clear – Tmcel’s earlier tower sale announcement didn’t appear to have attracted the interest of the continent’s leading towercos.
In late 2013, a domestic company, TowerCo Mozambique, tried and failed to set up towerco operations in the country. It is thought that the company was unable to reach an agreement on lease rates with Tmcel and Vodacom and as such, talks were disbanded. We have yet to hear rumours of any other domestic players forming.
Figure 9: Tower ownership in Mozambique
Namibia
Subscribers: 2.9mn*
Towers: 749
MNOs: Three
Towercos: Powercom
* Source: GSMA Intelligence
The Namibian mobile market has been dominated by two government owned MNOs: MTC and Telecom Namibia, although the entrance of privately held Paratus following an overhaul of the country’s telecoms regulation has introduced a new level of competition.
PowerCom, owned by MNO Telecom Namibia, is Namibia’s first dedicated infrastructure player. Managing a portfolio of 311 towers, the company has ambitions to integrate further assets into its portfolio. The company has tenancies from all three operators in the market as well as a number of non-traditional tenants.
The Communications Regulatory Authority of Namibia has proposed a new regulation mandating infrastructure sharing and prohibiting operators from setting up new infrastructure where there are existing sites. An announcement from the regulator is expected imminently regarding the legislation. The government have also introduced a network facility license category to regulate a designated infrastructure provider in the country.
MTC has announced plans to roll out over 524 rural towers from 2018 onwards, with 40 contractors and 17 different suppliers selected for the process.
In terms of power, the country’s electricity grid is extensive and as such, most sites only need rectifiers and battery banks, with back up DGs only on critical sites. Powercom report that only two of their 311 sites is off-grid. PowerCom is exploring the option of working with an ESCO.
Niger
Subscribers: 11.1mn*
Towers: 1,853
MNOs: Four
Towercos: American Tower
ESCOs: Aktivco
* Source: GSMA Intelligence
There are four MNOs in Niger; Airtel, Moov, Orange and Sahelcom. Airtel sold their portfolio of 600 sites to Eaton, with the transaction closing in 2017.
In early 2020 American Tower announced it had completed a deal to acquire all of Eaton Towers’ sites in the country, which we now estimate to number 677.
Over 50% of the country’s towers are off-grid with Eaton examining renewable energy options (including the repair/ replacement of 200 solar sites the company has inherited).
Orange recently signed an ESCO contract with Camusat’s Aktivco covering around 500 sites. Whilst new build in the market has been fairly modest, Airtel’s recent turnaround in profitability in the African market, coupled with them obtaining a 4G license means that Eaton expects build-to-suit activity to pick up.
Nigeria
Subscribers: 168.8mn*
Towers: 30,758
MNOs: Four GSM players (accounting for over 99% of the market share), two CDMA operators and host of LTE-only players
Towercos: IHS Towers, American Tower, Pan African Towers, Africa Mobile Networks (plus a handful of smaller players)
* Source: GSMA Intelligence
There are four GSM mobile network operators in the Nigerian market, namely MTN, Glo, Airtel and 9mobile (formerly Etisalat Nigeria). In addition to the four GSM players there are two CDMA operators and a host of LTE-only players.
Nigeria is a benchmark tower market for many reasons. It’s the largest mobile market in SSA, with 168.8mn connections among a population of 203.6mn*. It’s the oldest growth independent towerco market in Africa; towercos have been building towers in Nigeria since 2006. Almost half of SSA’s towerco-owned towers are in Nigeria, and over US$2.5bn has been spent by towercos to acquire 79% of Nigeria’s towers. Towercos have proved their ability to deliver 99.9% uptime in challenging grid conditions in Nigeria. Nigeria is not just a benchmark for African towers, it’s proof of the efficacy of the independent towerco model in any emerging market.
American Tower entered the Nigerian market in 2014 following an acquisition of Airtel’s 4,700 towers, whilst IHS acquired the portfolios of Etisalat and MTN in the same year. IHS has further consolidated its position in the market, acquiring HTN Towers portfolio of 1,211 sites as well as sites from Hotspot Network. IHS’ acquisition of HTN Towers also included a MLL contract for SWAP’s 368 towers, IHS has however since terminated the agreement. Pan African Towers has around 1,300 towers in the country.
A deep recession and the devaluation of the Naira had a major impact on Nigeria’s MNOs with knock on effects for their towerco partners. Unable to service a loan, Etisalat’s opco in the country was taken over by its creditors and rebranded to 9mobile; at the time of going to press, 9mobile is still seeking a new buyer. Towercos continue to recover lease payments owed by the operator.
MTN, whose NGN330bn fine for a failure to disconnect unregistered SIMs compounded their financial challenges, also struggled to make lease payments to towercos, with the operator recently renegotiating their contract with IHS. According to a statement from the operator, the new terms have “facilitated certain network volume commitments and provided more attractive terms for MTN Nigeria’s future network roll-out applicable from 2018 onwards”.
In spite of challenging macroeconomic conditions in Nigeria, IHS report strong growth, with the towerco having completed 4000+ technology upgrades for the year to date in Nigeria, on top of 2000 upgrades in 2017 and having built 1700 new sites in the same period. From building relatively few sites in 2019, American Tower have set their sights on achieving 500 net new sites in 2020.
In 2019 Africa Mobile Networks got their first Nigerian site active. AMN is a low-cost, rural-site specialist which operators on both a revenue share and traditional opex-model. They have a deal with MTN to deliver 420 rural sites before the end of 2020, and will soon be reaching a scale similar or larger than the longer tail of independent towercos already active in Nigeria.
IHS has invested heavily in upgrading power systems through their ‘Big Five’ initiative in the country, replacing diesel generators with solar hybrid solutions on over 10,000 towers through five different contractors (now three). The towerco is continuing to explore further green and energy efficiency solutions and are looking now at options to supply power beyond the tower which may ultimately require a tripling of the energy generation capacity of some of their sites.
IHS has a license to deploy fibre in Nigeria and they are starting formulate their fibre strategy, having identified about a third of their towers which they think have a good business case to deploy fibre to. Four other companies hold infraco licenses in the country which enable them to deploy fibre.
Figure 10: Tower ownership in Nigeria
Rwanda
Subscribers: 9.4mn*
Towers: 1,300
MNOs: Two
Towercos: IHS Towers
* Source: GSMA Intelligence
There are now two MNOs in the Rwandan market following Airtel’s acquisition of their larger rival, Tigo in early 2018. The new unit moved ahead of their competitors, MTN, in terms of market share.
IHS has acquired both Airtel’s and MTN’s Rwandan towers and, after having added build-to-suit towers and undertaking decommissioning work, now owns a portfolio of 868 sites. As a small market, new build is limited and decommissioning is still required.
IHS have announced that they are assessing solar farm opportunities in Rwanda that could potentially supply power to the national grid in the first ‘energy swap’ model to be used in Africa.
Of all the SSA regions, Rwanda is showing some of the strongest promise in small cells and DAS making it a key target for such companies looking to enter Africa; IHS have explored shared DAS.
Senegal
Subscribers: 17.6mn*
Towers: 3,925
MNOs: Three
Towercos: Al Karama Towers (pending closure of Expresso deal)
* Source: GSMA Intelligence
There are three MNOs in Senegal – Orange owned Sonatel leads the market, followed by Tigo and Expresso. Millicom is selling its opco, Tigo, to a consortium involving NJJ, Sofiman and Teyliom Group after having abandoned the sale to Wari.
Expresso Telecom has agreed the sale of their towers to newly formed towerco, Al Karama Towers. The sale and leaseback transaction also includes first right of refusal on new build for Expresso, with the operator planning to add an additional 200-250 sites in the next twelve months as part of the regulatory mandate for MNOs to increase coverage to underserved areas of the country. The transaction is expected to close imminently.
Sonatel (in which Orange has a controlling stake) had reportedly looked into a sale of its towers previously but talks failed, reportedly due to workforce resistance. Speculation has arisen as to whether the change in ownership of Tigo could precipitate the sale of towers, a portfolio likely to prove attractive to Al Karama Towers.
Sonatel is the only operator to possess a 4G license in the country but Tigo and Expresso had expressed a strong interest in securing licenses, with the sale of Expresso’s towers designed to raise capital for such a license. In February 2017, the Senegalese regulator, ARTP granted three new ISP licenses to locally owned entities, following in the footsteps of Hayo which is providing coverage in the Matam region. The introduction of the new ISPs is hoped to reduce consumer prices and improve the quality of service; it also presents additional tenants for Senegal’s new towerco.
There have been reports that a joint venture between South Korea’s SK Telecom and Middle Eastern firm CKG Group has applied for a fourth MNO license in the country, in a bid to access Senegal’s nascent LTE market.
Figure 11: Ownership of Senegal’s 3,925 towers
South Africa
Subscribers: 103.9mn*
Towers: 30,280
MNOs: Five
Towercos: American Tower, SBA Communications/Atlas Tower, Helios Towers, Gyro Towers, Sentech, Eagle Towers, Blue Sky Towers + ~20 other middle-market towercos
* Source: GSMA Intelligence
There are five MNOs in the South African market – MTN, Vodacom, Telkom and Cell C, with new data focussed MNO, Rain, having recently launched.
Towercos have struggled to get a foothold in the South African market since Cell C sold their portfolio to American Tower back in 2010; with Cell C currently on the brink of insolvency. Telkom has carved out their tower business into a separate unit, Gyro Towers in order to better commercialise its 6,500 towers.
Vodacom has developed a successful commercial towerco business model in house, including a platform on which other frequency holders can view available space on Vodacom sites. Towercos have long been eyeing up MTN’s portfolio of 10,500 sites with the operator having previously hinted at its appetite to divest the assets, there are however no signs of an imminent tower deal.
A long tail of build to suit towercos have emerged in South Africa, headed by the rapidly growing Atlas Tower which has been acquired by SBA Communications. SBA Communications had until 2020 been a strictly western hemisphere towerco, but now owns Atlas Tower’s portfolio of 955 sites in the country. Broadcast towerco, Sentech has 340 sites which it promotes for co-location. Eaton Towers had built a portfolio of 300 towers in the country before being acquired by American Tower back in 2016. With disagreements over lease rates, three of South Africa’s four MNOs have issued a moratorium on the use of American Tower sites and new build is being given to some of the country’s smaller players, whilst also supporting managed service companies to retain tower portfolios.
Helios Towers South Africa launched in early 2019 as a joint venture between Helios Towers and local fibre-player Vulatel. They acquired 100 towers when they bought SA Towers, as well as a pipeline of around 200 more. Over the next few years Helios Towers South Africa plans to add around 25 sites a month.
The power grid is robust and widespread in South Africa, with MTN reporting that all but 53 of their 10,500 sites are on-grid, however the reliability has recently suffered with Eskom forced to use rolling blackouts to manage demand. Battery theft has compounded the problem, prompting Vodacom to issue a 1,140 site ESCO RFP. Unlike the majority of their sub-Saharan African counterparts, South Africa’s towercos tend to operate a steel and grass model more akin to the developed markets of Europe and the U.S. with power managed as a pass through. Towercos have begun to eye up the fibre market in South Africa, with American Tower signing a partnership with fibreco, Frogfoot, and Helios Towers partnering with Vulatel.
The ECA bill is making its way through parliament with a proposed introduction of a Wholesale Open Access Network, which would use 5G spectrum to create a wholesale network not owned by any existing MNO. Spectrum is in short supply in the South African market with an auction long overdue.
As of January 2020, Vodacom has announced plans to use Liquid Telecom’s spectrum to launch 5G by the end of the year. ICASA, the South African regulator, has not auctioned 5G appropriate spectrum and so Vodacom is taking the unusual step of working with Liquid Telecom because they own spectrum in the 3.5GHz band. Details of the rollout plans are limited, but they will begin on existing sites, before needing to densify due to the propagation characteristics of 3.5GHz bands.
Figure 12: Ownership of South Africa’s 30,226 towers
Tanzania
Subscribers: 45.8mn*
Towers: 8,326
MNOs: Six
Towercos: Helios Towers
* Source: GSMA Intelligence
Helios own 3,637 towers in Tanzania having acquired both Vodacom and Millicom’s portfolios in the country as well as Zantel’s mainland sites. In the Vodacom transaction, Vodacom sold 100% equity in the towers but obtained a 24% stake in Helios Towers Tanzania, a stake which Helios has since purchased. In the Millicom deal, Millicom and Helios formed a joint venture in which Millicom held a 40% stake, the 40% stake was then restructured into a shareholding at Helios’ group level, a stake they may have monetised during Helios’ recent IPO. Millicom is in the process of consolidating Zantel.
In 2016, Airtel agreed the sale of the 1,350 sites to American Tower, but the deal was cancelled. One of the biggest contributing factors to the calling off of the deal was the introduction of a new legal requirement for telecom companies to list a 25% stake on the Dar Es Salaam stock exchange; a ruling which was introduced after the deal was announced and a ruling which applies to towercos as well as operators. Vodacom have been the first company to issue their IPO prospectus but with limited liquidity in the local market, the process has had to be opened up to international investors. In May 2019 Airtel announced a request for interest for 1,400 towers, but no further details have emerged.
In addition to Tigo, Vodacom, Airtel and Zantel, Halotel and TTCL are present in the market, with each of the main MNOs dominant in a different part of the country. Halotel has been particularly aggressive in their national rollout, driving significant additional tenancies to Helios. Azam Telecom became the newest MNO to be awarded an operating license and expects to start rolling out its network imminently. Smart have exited the market, but retain 40 unwanted towers.
Millicom has commenced proceedings to sell its opco in the country with the operator having received non-binding offers from several parties. Operators rumoured to have expressed an interest in the opco include Econet, MTN, Airtel and Vodacom (with the latter two companies already having a presence in the market).
Helios report that approximately 80% of their towers in the country are on-grid, with grid availability currently around 20 hours per day.
In July 2016, it was announced that each of the three main MNOs have entered into a RANsharing agreement to improve coverage in rural areas. To enhance their rural coverage, TTCL are working with Fariwaves to build 13 low-cost rural sites based on Fairwaves’ OpenRAN technology.
Figure 13: Ownership of Tanzania’s 8,326 sites
Uganda
Subscribers: 26.8mn*
Towers: 3,993
MNOs: Five
Towercos: American Tower
* Source: GSMA Intelligence
There are 5 MNOs in the Ugandan market; MTN, Airtel, Africell, Smile and UTL. A sale of UTL to Teleology Holdings fell through in early 2019, leaving the future of the state-owned operator and its 400 towers in doubt. Smart, i-Tel, Afrimax have all recently exited the market. Lycamobile, the international calling specialists and previously MVNO-only operator, is partnering with local ISP Tangerine to launch a MNO into Uganda and is in talks with local towercos about their tower requirements.
Eaton Towers had completed three tower transactions in Uganda, acquiring the towers of Orange, Warid and Airtel. Airtel has since acquired Warid whilst Orange has sold out to Africell. American Tower entered into a joint venture in the country with MTN (American Tower is now purchasing the remaining 49% in the joint venture from MTN). In 2020 American Tower completed its acquisition of Eaton Towers and now has a portfolio of 3,193 towers in the country.
Around 150 new towers are expected to be added in the next 12 months. Around 27% of sites are off-grid, with about half of new build being off-grid. Grid outages are common, even in Kampala, meaning that lots of investment is going into hybrid solutions. Eaton has conducted a pilot study to assess hybrid solutions under both capex and opex models, but it is not clear what will happen post-acquisition.
Figure 14: Ownership of Uganda’s 3,993 towers
Zambia
Subscribers: 15.1mn*
Towers: 3,000
MNOs: Four
Towercos: IHS Towers
* Source: GSMA Intelligence
There are now four MNOs in the Zambian market, with UZI Zambia (a unit of MNO Unitel which has operations in Angola, Sao Tome and Principe, Cape Verde and Portugal) being awarded a license in March 2018. UZI Zambia joins Airtel, MTN and Afrimax (which trades under the Vodafone brand). IHS Towers have acquired the portfolios of both MTN and Airtel and now have a portfolio of 1,728 sites in the country which has an estimated 2,300 towers. IHS has been investing heavily in solar hybrid solutions in the country with around 20% of sites hybridised as of Q2 2017.
Zimbabwe
Subscribers: 12.9mn*
Towers: 3,000
MNOs: Three
Towercos: Eighty Four Dynamics
ESCOs: Distributed Power Africa
* Source: GSMA Intelligence
There are three MNOs in Zimbabwe, market leaders Econet Wireless alongside NetOne and Telecel (with the government having a stake in the latter two). POTRAZ, the Zimbabwean telecoms regulator has proposed a revamp of existing legislation. The regulator had previously announced its appetite to promote infrastructure sharing in the country, and in May 2019 NetOne and Econet announced plans to share infrastructure to relieve capex pressure.
Econet owns the largest tower portfolio in the country with around 1800 towers; the operator had initially planned to carve out the towers into a separate business unit, Ecotowers, but plans appear to be on hold. Telecel and NetOne own around 600 towers each. Econet reports that it currently uses around 60 third party towers.
With regards to the power situation, Econet reports that just 46 of its towers are off-grid, running on solar battery hybrids. Grid availability for on-grid sites in Zimbabwe is good, currently sitting around 95%. Econet’s in-house ESCO, Distributed Power Africa manages power across its tower portfolio, whilst also providing power to other commercial and industrial customers
Figure 15: Ownership of Zimbabwe’s 3,00 towers
Figure 16: TowerXchange SSA towerco activity and tower transaction heatmap
Figure 17: TowerXchange SSA ESCO heatmap
