Towercos have made significant progress in expansion across the region over the last few years, both in organic growth through new builds as well as M&A. Leading this drive has been the news seeing Ooredoo, Zain and TASC announce an acquisition that will propel TASC Towers to become the 14th largest towerco in the world, and the 7th largest operator-owned towerco globally.
Ooredoo has been evaluating a tower deal for over a year and has announced a rather unique structure to the deal, with a planned combination of tower infrastructure between Zain, TASC Towers and Ooredoo to form a towerco with around 30,000 sites.
The deal still needs to go through the arduous journey of regulatory approval, no easy task when coordinating with multiple regulators some of whom are dealing with a tower licensing framework for the first time.
While TASC Towers is retaining its title as an independent towerco, both Zain and Ooredoo appear to be taking minority stakes in TASC as part of the deal (although Zain is already an equity partner). No further details regarding exact tower counts, price or structure are known and it is likely that a deal of this magnitude and complexity will take some time to complete.
TASC Towers is still due to finalise the handover of Zain’s portfolio in Bahrain and both Sudan and South Sudan, although due to ongoing conflict the latter appears on hold. The deal brings TASC Towers, and the towerco model, into three new tower markets (Algeria, Tunisia and Qatar), consolidate in Iraq, and bring new competition to IHS Towers in Kuwait.
Ooredoo is selling their tower portfolio in Oman as part of a separate deal, igniting excitement in a market that has only just seen the arrival of pan-African towerco Helios Towers enter the market to join local greenfield towerco Oman Tower Company, who recently passed its 1,500th tower deployment milestone.
With Vodafone rapidly expanding their points of presence, and Omantel stepping up their competition to retain market share, both Oman Tower Company and Helios Towers have been receiving requests to grow colocations and deploy new sites.
It’s not clear who will be the victor in the bid for Ooredoo’s towers, but it appears the portfolio is being sold at an international level and Helios Towers is focused on upgrading Omantels old tower network, so a third towerco entrant is certainly possible.
Saudi Arabia’s PIF is finalising its transfer ownership of 100% of TAWAL from its subsidiary stc Group, and with the earlier acquisition of Zain’s portfolio into LATIS at the start of 2023, the question of tower consolidation between the two is imminent.
With TAWALs launch in Pakistan as well as the acquisition of United Group’s towers portfolios in Bulgaria, Croatia and Slovenia, MENA has become the home of two major towercos with world-ranking tower volume. Mobily remains next, and although no confirmation has been announced it seems there are preparations for further talks once the tower market has been consolidated.
LATIS has already received a significant pipeline of build-to-suit, expecting to deliver around 2,500 new sites over the next 10 years. The towerco is also already looking at new solutions including power-as-a-service to help drive down energy opex and carbon emissions.
In Pakistan, economic downturn has seen a decline in tower rollout over the last few qauters, with ongoing macroeconomic and political issues causing a shortages of US dollars, leading to supply shortages of equipment. Interest rates have also skyrocketed to 24% which makes raising capital extremely challenging for all players in the market.
As a result, towercos have delivered below their expected rollout targets, although this is not to do with lack of demand but restrictions on supply. However, the market appears to be seeing recovery and MNOs are shifting into growth mode as they have access to more capital and equipment. ARPUs are also going up, a change that was desperately needed to support operator revenues. US dollar shortages remain an issue, but Pakistan is now set to receive support from the International Monetary Fund, which should improve the situation.
While the sale of Deodar, Jazz’s tower unit, has appeared to have stalled again and remains on hold until market conditions improve, PTCL is in discussions with Telenor for the sale of their Pakistan unit and have moved forward with an intent to purchase securing board approval. While speculative, the possibility of a tower sale as part of the deal could be on the horizon.
Energy prices have also been volatile, increasing around 250% in the last 2-4 years and energy price escalators are pushing MNOs to demand towercos act to install on-site power. Engro Enfrashare reports that 50% of their sites are already equipped with solar and battery hybrid solutions. Towercos are entering into new discussions with MNOs who want to renegotiate the contracts to reduce their own energy costs and are seeing a willingness to pay an additional free for more on-site power generation.
The TASC / Ooredoo deal further accelerates tower acquisition in North Africa, as TASC Towers brings the towerco model into two new markets; Algeria and Tunisia. Morocco continues to allude any major tower activity, although TowerXchange is aware of several towerco projects that are expecting to launch greenfield build-to-suit services in the market.
Egypt is finally seeing its first sale leaseback with Telecom Egypt issuing a tender for 2,700 sites, and MobiTower running a built-to-suit program in rural areas under a government-led initiative. IHS Towers has been licensed since 2021 but has yet to deploy any towers, so a more friendly regulatory framework driving sale leasebacks and infrastructure sharing may help kick-start the towercos goal of 5,800 towers under operations that was part of the original licensing deal.
However, with the recent news of MTN Nigeria declining to renew their lease with IHS Towers in favour of competitor American Tower and the subsequent collapse of both stock price and investor support any plans for acquisitions are likely to have been disrupted, if not put on hold.
TowerXchange will be returning to Dubai for the 6th annual Meetup MENA on the 7th-8th February 2024.
