TowerCo of Africa: the continent's next major towerco?

• Who is Stephane Beuvelet and TowerCo of Africa?

• Where is TowerCo of Africa active

• What are TowerCo of Africa's expansion plans?

• An excerpt from the TowerXchange Top 20 CXO Report

Originally beginning as a carve out of AXIAN Telecom's tower portfolio in Madagascar, TowerCo of Africa has grown to become a leading greenfield towerco developer in three African markets. With an ambitious roadmap of organic and inorganic growth ahead, TowerXchange speaks with TowerCo of Africa's CEO Stephane Beuvelet, to understand his plans for the rising towerco.

Thank you for the question and for the opportunity, TowerCo of Africa started its journey in Madagascar back in 2011 after we finalised a sale leaseback of Telma’s tower portfolio. Over the next 10 years we grew our operations through greenfield build-to-suit, consolidate our expertise, improve margins to become the most profitable Towerco, and patiently waited for the right opportunity to expand. It came in 2021 when we acquired Ubuntu Tower Uganda Ltd (which was launched by ex-Eaton towers management), now renamed as TowerCo Of Africa Uganda

This year we are establishing new TowerCos in two new geographies; one being a greenfield operation in the DRC and the other a TowerCo in Tanzania from Tigo Sale-and-Lease-Back. We are now going through a period of rapid acceleration with probably 2 or 3 new operations in the next 5 years.

Naturally, such a rapid expansion came with its own challenges which we were quick to mitigate. We recognised early on that bringing in the right skills would be critical to our success. We also invested in creating a proper internal structure and ensured we kept abreast of evolving automation technologies.

Our proudest achievement was the acquisition of Ubuntu towers. After receiving all regulatory authorisations, we launched an aggressive greenfield tower rollout growing our portfolio from 5 sites to 350 sites in record time, with nearly all sites having on-site hybrid energy. Now, just over 2 years later, it is heartening to see our hard work translate to a big positive impact on the market. Even if our portfolio is 10 times smaller, we have proved that we are a serious competitor against American Tower and this translate into the trustworthiness from our main customers, MTN and Airtel

New MNO license obligation in Uganda requires 98% coverage within 3 years. MNOs have struggled to find the resources to build their own towers and some remote sites aren’t profitable, so we have a great opportunity to play a role in supporting connectivity in the market despite being a new player.

I have been in telecoms for almost 30 years, starting in France and moving to Africa as an RF engineer. I was the Principal Engineer for Celtel International (now Airtel Africa) when the Africa GSM rollout started back in the late 1990s. After rolling out GSM/Broadband Networks across the continent for decades, I occupied various CTIO roles in many different countries before transitioning into CEO position in one of the largest operations in Nigeria.

In the late 2000s, AXIAN Telecom founder Hassanein Hiridjee asked me to help him grow his TowerCo business across Africa, which was extremely challenging because the TowerCo model was only known in the U.S. but completely new in Africa. Helios Towers was founded in 2009 and IHS Towers started Colocation business the same year I think. Over the years, MNOs were starting to lose their passive infrastructure management skills, having outsourced much of the managed services side of their operations. I realised that if I wanted to maintain and hone my skillset, as well as acquire new business development skills it was the right time to move into the TowerCo space.

Since then, the tower industry has become such an interesting and dynamic place to be. Africa has a huge infrastructure shortage, and with the population expecting to triple in the next 80 years, the massive infrastructure gap needs to be addressed urgently.

But, what was also important, was to ensure that we address this demand in a sustainable manner, with respect to the environment. To make the industry as green as possible, we aim to use the latest renewable energy technologies on the market.

There are a wide array of jobs and career opportunities working for TowerCos and whether you come from a commercial, financial or engineering background there will always be a role for you. Generally, TowerCo businesses have small teams, so each person plays a bigger role and their work has a greater impact on the company as a whole. For the youth, what is particularly appealing about working in the tower industry is the opportunity to continuously enhance their skills but also develop new ones that enable them to be specialists.

While skills are vital from a technical perspective, it’s also important that employees develop and maintain a deep knowledge of the product they are selling, and are keeping pace with the new services regularly being introduced to the industry. The youth, today, are also very passionate and want to play an active role in the company’s journey, looking for new opportunities. They want to be associated with companies in their growth phase rather than established ones, so there is a lot of excitement in building a career at TowerCo of Africa and the tower industry.

We are an equal opportunities business that is always on the lookout for the best skills and talent. But, as a business that is deeply invested in leveraging diversity and actively driving inclusion, we are also very proud of the milestones achieved in this regard. As you can appreciate, the tower industry is traditionally male dominated, but we are proud of the depth of female leadership in our business. We are particularly delighted to have talented, inspiring female leaders within our organization such as the CEO of our DRC operations and our CFO in Tanzania.

A positive impact, in every aspect of business, is at the core of our DNA. Money is one thing, but it’s also important to make a positive impact on the environment, on people and on the economy. As a responsible business that prides itself on sustainability, we align with and actively drive the ESG roadmap set out by our parent company, AXIAN Telecom.

Greening the network reduces OPEX as well as emissions, so there’s no reason not to do it while also ensuring an acceptable ROI. Tower sites are essentially mini power plants, and there is a lot of focus on improving energy efficiency of telecom infrastructure networks. We are looking beyond lithium-ion batteries and towards nickel and cobalt solutions, as well as technological improvements in solar which can be twice as efficient as the current ones. It is exciting to see these new innovations come to make our operations greener and more cost-effective.

Our aim is to have a direct impact on CO2 emission reductions and empower local communities by creating direct and indirect job opportunities, both through local in-house teams and by working with local vendors, including managed service providers and security companies. Despite being adaptors of automation and technology, we still need people on the ground. Perhaps robots will take over in the distant future, but for now we operate in markets with high unemployment, and it is our duty to create jobs to support local communities.

We work also with a rural electrification operator WeLight on some pilot projects in Madagascar for energy inclusion in rural areas. The TowerCo is the anchor client of the power solution, while Welight is also responsible for the distribution and connection of this sustainable and reliable electricity for the people without access to electricity. We are expanding this partnership to our other countries.

At AXIAN Telecom level, we publish a scope 3 impact report and undertake year on year comparisons to assess our sustainability progress. However, with our roadmap of expansion it is inevitable that our CO2 emissions will be increasing, so if we can stabilise – and where possible, mitigate against that increasing impact, that will be a huge achievement. Cost considerations do also have limitations on what you can do. I would love to make all our sites solar, but it needs to be a practical solution, and we want to deploy the limited capex available to maximise sustainability while securing employment opportunities and remaining economical.

Our primary strategy is to grow alongside AXIAN Telecom as we are part of a group which is also rapidly expanding. When AXIAN acquired Tigo in Tanzania, it made sense to carve out the towers into TowerCo of Africa in order to develop those assets and create a solid base to grow organically through greenfield built-to-suits. However, we maintain a strict neutral policy with our clients and don’t treat any AXIAN Telecom subsidiary differently, otherwise our business model wont work.

When considering new markets to expand into, we rank various countries using all sorts of metrics including telecom country ratings, ease of doing business, currency stability and so on to find the best opportunities. There is a massive pipeline of opportunities that come to us through various partners and bankers, so we ensure robust due diligence to find the best ones.

While M&A isn’t an exact science, we do have a practical and targeted approach to expansion. We have experience and are comfortable in various situations: greenfield deployments, AXIAN Telecom MNO carve-outs, independent sale and leasebacks, M&A acquisition.

It is very important that we control our costs. During the pandemic and since the war in Ukraine, we have seen a huge increase in the cost of equipment and energy. Even today, we receive quotations with abnormal delivery timing (for example – the lead time on some generator brands exceeds 10 months). As we do direct purchases with manufacturers located around the world, having people with the right skills who understand how to import equipment is so important. It’s a lot more than just contract management.

While pricing and lead times to deliver have normalised, procurement is still challenging. Our customers have their own timelines that we need to meet, regardless of what the market conditions are. We have introduced new tower specifications to minimise steel use and remove as much copper as possible from the design to provide the most efficient and cost-effective tower possible.

We also ensure that we stockpile equipment ahead of time. The usual tactic is to order an extra 10% above what you need so you can build up a stockpile over time, but as we launch operations in new markets we try to anticipate needs well ahead of time to ensure smooth lead times.

Coming from an MNO perspective, I believe that within the traditional RAN colocation and energy TowerCo perimeter there is an opportunity to move into active services, and we are already trying to adopt this. In Madagascar we provide network-as-a-service, either on a zero-capex model for one operator or using Active sharing if the regulation permits it.

There is also an increased appetite from MNOs to provide in-building active solutions, and now we are using outdoor solutions alongside fibre and power which has been very attractive for our customers. We also offer outdoor Distributed Antenna Systems (DAS) and street furniture (such as lamp posts) to support urban coverage.

By expanding our service offering beyond the standard macro tower solution, we are transitioning towards a netco model as MNOs see an opportunity to reduce capex on the active as well as passive side. TowerCos already understand the needs of their customers and have strong relationships, skill sets and operational platforms, so we are well-positioned to fill this role. .

And the most important point probably, we are part of AXIAN Telecom along with two other Infrastructure companies, Silver Links (terrestrial fibre and submarine cables) and Stellarix (Data Centers). We strongly believe into a multi asset InfraCo – Towers & Fibre & Datacenters – in order to deliver synergies around FTTT, edge regional datacenters, telecommunications nodes, network businesses etc.

Compared to other telecom Group, AXIAN Telecom has not sold its infrastructure to InfraCos, keeping this competitive advantage, while having in-house the expertise for each asset type. It could be more challenging for a single-asset player, like a TowerCo, to diversify into fibre or datacentre for example. So we believe, we are the best positioned telecom Group in Africa to build this first multi asset InfraCo, with TowerCo of Africa being a key pillar of this new strategy.

We work closely with our customers and with governments across all the markets we operate in. In Madagascar, we partnered with the World Bank to deploy a huge connectivity backbone (PICOM), and in Tanzania we are supporting Tigo to deploy rural towers, as part of a government program called the Universal Service Fund. We have a similar programme in Uganda - the Rural Communication Development Fund (RCDF), which we work closely with the government on. That 98% coverage requirement in Uganda I mentioned does present significant commercial challenges for MNOs and the RCDF program allows use to reduce the digital divide.

Connectivity programmes are extremely important in closing the continent’s connectivity gap, so we put a lot of attention in optimising tower and power design to make it as cost-effective as possible, as even with subsidies, it can be economically challenging for MNOs.

We have been able to reduce tower deployments below $30,000 for Ultra Rural Sites through optimised infrastructure design, which is why it’s so important to have the right engineering. By being part of the rural solution, we can ensure that everyone benefits; whether it’s local communities, MNOs or the wider economy. On occasion, we have even built roads or expanded the grid to deliver connectivity infrastructure, showcasing the indirect benefits we bring to the markets we operate in.

We want to be a responsible partner supporting connectivity and green energy across the continent, helping our customers grow and building the infrastructure they need to provide affordable services in Africa.

Despite the challenges, the potential for this continent is enormous and the needs, urgent. We are delighted to play a meaningful, empowering role in the growth of the continent. This is what our vision is, to contribute to the success of Africa. I also believe that the African Continental Free Trade Agreement will help accelerate access to credit, grow local manufacturing industries (helping transform local raw materials into ready to use products) and move us towards a fully interconnected continental supply chain. This is when the immense potential of the African continent will become far more tangible.

Africa is one of the fastest growing regions in the world, overtaking China in GDP growth. Governance is key to our success, and being able to attract investors, manufacturers and talent to the continent is critical to fuel our growth.