ANTOSC reveals Angola’s growing potential

Improving service for Angola’s 14mn mobile subscribers and expanding coverage to more of the country’s 30mn people was the driving force behind a 2016 law encouraging infrastructure sharing. TowerXchange speak to Angola’s first towerco, ANTOSC, to learn more about the country’s telecoms sector and ANTOSC’s progress in its first two years. ANTOSC have now built 18 sites in the country, with plans to build 100s more. Angola is a difficult place to operate with poor grid quality, high import prices and a brief history of infrastructure sharing, but that presents an opportunity to the first company that can make it work. 

TowerXchange: Can you please introduce yourself and your history in the telecoms industry? 

I am a leader in the telecommunication sector of Angola, with 26 years of experience in the sector, working on projects aimed at improving and optimising mobile networks. I have worked at Nortel Networks, Bell South Mobile Operator, Visa Beira Group, Alcatel Lucent, Nokia, Ericsson and Anglobal. I have a long career as an engineer and in business development on the African continent.

I worked with Ericsson for three years in charge of Angola Network Expansion for Unitel, as Network Design and Optimisation Project Manager, contributing to the growth from 850k to 8mn customers.

In 2018, together with a group of Angolan entrepreneurs, we took the idea of creating the first Angolan towerco, promoting an infrastructure sharing culture and thus strengthening the country’s development plans for the sector

TowerXchange: How many more towers need to be built to achieve full coverage? What is the level of SIM penetration and ARPU?

In Angola I believe 80% of the country has voice coverage, but only 47% of the population has internet access, and this is a big problem because infrastructure is lacking. 

We have two active mobile operators, Unitel and Movicel who between them own around 2,500 towers, for some time Angola Telecom has owned a license to operate a mobile network, but it has not yet invested in an operating network. To be more specific, Unitel own around 1,800 towers, Movicel have around 800 towers, Angola Telecom 300 towers, and there are another 400 towers owned by others in the market. I do not have accurate data on ARPU, but it should be around US$5.

There is still a market for construction of around 1,200 new towers in the country. There is also space for acquiring existing towers and adapting them to share with other operators.

The country is undergoing a major series of political and economic reforms, but at the moment investments are slow and the economy will grow very little this year, but a better business environment is being created at the moment. We expect an improvement in investment and economic growth in the next two years.

TowerXchange: Tell us more about ANTOSC, what assets do you have on the ground? 

ANTOSC was founded on May 17, 2017, and was created in line with the strategy of the Angolan government to promote a culture of infrastructure sharing in telecoms, as embodied in Decree-Law 166/14 and the National Plan of Development 2018-2022. In the last two years we have 18 new towers built, but very great expectation regarding the future. Our plan for this year is for over 40 new towers. We are also in negotiation to lease existing towers but we have not bought any existing towers yet.

The culture of infrastructure sharing is a new thing in Angola and it takes patience to introduce this concept in the country. As initially in other countries, operators are still not 100% certain that sharing has an added value for them, but we are working to educating them and have the support of the government. 

TowerXchange: What kind of growth opportunities exist and what challenges are faced by towercos in Angola?

The opportunities are great because the country needs more infrastructures for the telecoms, there is no doubt. For the past two years the network expansion of Angola’s operators was at the minimum, and we think another 1,200 towers are required as well as increased sharing of the existing stock. But the challenges are also great.

While there are challenges for ANTOSC, the same challenges confront Angola’s MNOs, and ANTOSC is in the best position to help address those challenges. By reducing capex and reducing opex through sharing investment and maintenance and power management of cell sites. One thing pushing up capex and opex is the lack of domestic production, we have to import almost everything.

TowerXchange: Let’s talk about those challenges – what are typical opex costs? How are you managing your opex costs?

The costs of opex are very high, there is no grid at the places where our towers are and the use of diesel generators is very common here but is also very expensive. The cost of fuel is still somewhat subsidised by the government, but economic reforms mean those subsidies are close to ending which will further push up the cost of fuel delivered to sites. ANTOSC has bet on a hybrid solution which is working for us, we achieved a reduction in energy costs of the order of 70% relative to straight use of diesel genset. 100% of our sites are off grid and we use a battery deep cycle process to save generator run hours and reduce total cost of ownership.

Another major problem is that we have a very poor terms of trade, Angola does not produce much, and so we import the towers, shelters, batteries and all the necessary technology and this also costs a lot and inflates our capex costs. Of course MNOs also face these costs and we argue that infrastructure sharing is the best way to reduce these structurally high opex and capex costs. 

TowerXchange: Have either of the MNOs expressed an interest in divesting their existing portfolios of sites?

There are slightly differing attitudes between the two MNOs. Movicel started to look at selling a percentage of their sites but has not made any progress currently towards that. Unitel has not expressed an appetite to sell their sites. Both companies have contracts in place with landlords who own the land on which their sites sit so as these contracts approach the end of their life, they may look to divest their towers.

TowerXchange: Do ANTOSC have ambitions to enter other markets beyond Angola?

Yes, whilst our idea is to own 450 sites in Angola within the next seven years, we also have plans to enter neighbouring countries. We are looking at Zambia, Namibia, Congo, Senegal and Cape Verde – and have entered negotiations already in the latter two markets.

TowerXchange: Can you tell us a little bit about how ANTOSC is financed and how they have obtained their experience in the telecoms sector?

ANTOSC’s shareholders consist of Anglobal, an experienced telecom infrastructure services company in the market, which possesses a 49,2% share, a second local investor has a 28% share and three different singular people complete the line up. The company is currently seeking external investors and are open to such parties owning up to a 49% stake in the company. In terms of experience of the management team, we have been active in the telecoms infrastructure space in both Angola (through MSP Anglobal) and Brazil, where there are a number of different towercos.

TowerXchange: Please summarise your vision for the future of your company?

Angola continues to be a country of opportunity and this country has great potential. The current government has made a great effort to fight corruption and motivate investors to bet on the country. Diversification of the economy and encouragement of production are essential to development, and I believe in this country and its potential. We at ANTOSC know that it will not be easy but we are very convinced that with hard work, persistence and courage to invest, even in times of crisis, we can make a difference. I have no doubt on this point and, as our slogan – “ANTOSC, a company with a talent to share” – says, the gateway to the development of communications in Angola is strong and consolidated partnerships.

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Angola has been attempting to create a four-operator market for some time, and took a big step forward and another step backwards in April this year. Telstar Telecomunicações, a local start-up was awarded and stripped of Angola’s fourth mobile license in April. Originally seeing interest from 27 domestic and foreign companies, the mobile license competition ended with just two applicants. Less than two weeks after the award of the license Telstar’s award was cancelled because of “non-compliance with the terms of the procedure, the requirements relating to the balance sheet and profit and loss statements, and the statement of overall turnover for the last three years.” The license competition has since been relaunched, but it will be some time before a fourth licence holder enters the market. Angola Telecom, the fixed line incumbent may allow its licence to be used by a third party to enable an new entrant.

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