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Driven by the recent Ooredoo-Zain mega-merger with TASC Towers, towerco penetration in the MENA region has surged to nearly 30%, with significant potential for further expansion. The towerco model has already proven its success in markets like Oman and Saudi Arabia, where partnerships with major players like Zain Group and stc have solidified its value. This has led mobile network operators (MNOs) across the region to recognise the economic benefits and synergies that towercos bring.
As a result, nearly all MNOs are reportedly exploring opportunities related to tower infrastructure sales, with many discussions reaching boardroom level. The question that will determine the future of the next stage for the MENA tower industry will be how operators will look at bringing these portfolios to market. The growth of TASC Towers and TAWAL have tilted the scales heavily towards operator-owned towercos as MNOs have become aware of the value creation that towercos bring to their otherwise inactive passive telecommunication infrastructure.
This outlook is boosted by the strong financial performance of towercos in the region; Helios Towers saw a significant boost to their revenues after the acquisition of Omantel, while IHS Towers reported strong growth from their Kuwait operations. TAWAL does not publish their financial results, but their expansion into Europe and appetite for further growth indicates that they have proven themselves successful. Ooredoo’s valuation of their share of TASC Towers puts its valuation on par with European and US-valued towercos.
What remains to be seen is the response from the rest of the region’s operators, particularly those in local markets who don’t have the scale to form large or multi-country towercos. It also remains to be seen how successful operator-owned towercos will be at colocation, as tenancy ratios remain low across the region for both carve-outs and independents.
Orange had been reviewing its infrastructure strategy with plans to carve-out some of its tower infrastructure across 14 MEA markets, but the latest results of this review revealed that unclear regulation and high tax rates made this untenable. However, there are still some plans to look at carve outs and joint ventures in specific markets, with Orange in talks with Vodacom / Vodafone about the potential to share infrastructure.
At the last annual TowerXchange Meetup MENA, an e& spokesman discussed an internal plan for a tower strategy, although not to expect anything in the next 12-18 months. However, many of its regional entities are joint ventures (including in Pakistan, Egypt and Morocco) making it difficult for the group to formulate a cohesive regional strategy.
Other local MNOs are also considering their tower strategies, which will likely be shaped by their reaction to the TASC-Ooredoo deal. TowerXchange is aware that some local opcos are looking for external towerco partnerships to bring in competition against TASC Towers. Either way, this could prove a good opportunity to see the growth of independent towercos in response to a wave of operator-led M&A.
Saudi Arabia is seeing the final step in towerco consolidation, with Mobily starting the process of reviewing a tower sale. There is only one likely buyer for this portfolio should a deal emerge; the country’s Public Infrastructure Fund (PIF) which is currently restructuring the tower market as the now-sole owner of both TAWAL and LATIS, the kingdom’s two towercos.
Most recently, Saudi Arabian sovereign wealth fund PIF announced it has completed the acquisition of stc Group’s 51% stake in TAWAL and is now consolidating the towerco with LATIS into a new single entity, expected to be completed in H2 2024. This new towerco will operate nearly 30,000 towers across an international footprint after TAWAL acquired United Group’s towers in Eastern Europe.
Pakistan saw a slowdown of build-to-suit in 2023 due to macroeconomic volatility, supply chain challenges and import restrictions. However, towercos have deployed around 10,000 sites over the last five years and expect to do another 10-15,000 in the next five. Jazz failed to sell their opco Deodar to TASC Towers and it is unknown when the next buyer will arrive. The completion of e& and PTCL’s acquisition of Telenor and consolidation with Ufone is expected to help drive up low ARPUs, with a possibility of a partial or staggered sale of its tower infrastructure.
‘New TASC’ is expected to take between 12-18 months to complete the handover of Ooredoo’s 20,000 towers which will be staggered by market over the period, although this order is not known. It is also unclear what will happen to the handovers from Zain in Bahrain, Sudan and South Sudan (the latter on hold due to conflict) although these will be expected to continue at some point in the future.
Telecom Egypt is in ongoing talks for the sale of its 2,500 towers with bids ranging from US$150-250mn, putting a per-tower valuation at US$60-100,000. These sites are understood to be 50% ground-based and 50% rooftop, with most in urban areas. The deal is also understood to include a build-to-suit commitment of 1,500 – 2,000 sites. A date of Q1 2024 was originally given for the deal to finalise, but it appears talks are ongoing, and the buyer remains unknown. Vodafone Egypt, which was transferred to its African subsidiary Vodacom Group, is also in the early stages of a carveout, mirroring the group’s South African strategy forming operator-owned MAST Services in 2023.
However, it is unknown whether this is in preparation for a sale leaseback, handover to MAST or the formation of a new local opco.
In the following pages TowerXchange will update you on the vital statistics and dynamics of the 16 MENA markets we cover.
Figures included in the report:
Figure 1: Breakdown of ownership of MENA’s telecom towers
Figure 2: Tower counts across MENA markets
Figure 3: Footprints of MENA’s major MNOs
Figure 4: Heatmap of tower deals and towerco activity in MENA
Figure 5: Algeria – estimated tower count
Figure 6: Egypt – estimated tower count
Figure 7: Iran – estimated tower count
Figure 8: Iraq – estimated tower count
Figure 9: Jordan – estimated tower count
Figure 10: Kuwait – estimated tower count
Figure 11: Morocco– estimated tower count
Figure 12: Oman– estimated tower count
Figure 13: Pakistan – estimated tower count
Figure 14: Qatar Mobile Market Share
Figure 15: Saudi Arabia – estimated tower count
Figure 16: SIMs per tower in MENA
Figure 17: Tunisia – estimated tower count
Figure 18: High telecom service quality in the UAE
Figure 19: Major tower transactions in MENA since 2017
