Admaius Capital Partners, an Africa-focused private equity investor, has acquired a majority stake in Rwandan towerco TRES infrastructure Limited. The investment will support and enable TRES to expand its tower portfolio in Rwanda to support the country’s goal of achieving 95% geographical coverage over the next few years, coupled with the rollout of 4G densification and emerging 5G deployment. This is expected to improve network affordability and connectivity in both rural and urban areas.
About Admaius and TRES
TRES Infrastructure is the only local towerco in Rwanda and supports the country’s leading MNOs, MTN and Airtel Africa. TRES is growing quickly, and the number of towers has more than Quadrupled over the last year or so, and growth is expected to continue in line with Rwanda’s economic development.
As the Rwandan market is growing and developing, co-location is increasingly important and TRES aims to service both MTN and Airtel, as key customers. TRES also have an inbuilding solution (IBS) license providing multi-tenant hosting for government and commercial buildings.
Admaius Capital Partners is an experienced African investment manager currently managing in excess of US$280mn through its Virunga Africa Fund 1, and is headquartered in Kigali, Rwanda with offices in Kenya, South Africa, Tunisia, Egypt and London.
The business includes management from some of Africa’s leading investment firms including Carlyle, actis and Standard Chartered, focusing on key areas in financial services, healthcare, education, FMCG and TMT.
Admaius emphasises its intention to deliver social development impact as part of its investment projects, which was a major factor to why they decided to enter the telecom tower sector.
Rwanda: a small tower market with big potential
With around 1,900 telecom towers, Rwanda is not a large tower market, ranking 18th in Africa. However, as is often the case on the continent, Rwanda faces under-penetration of tower infrastructure and strong macros with rapid population growth and technology adoption are contributing towards pressure on mobile capacity and coverage.
Rwanda’s three MNO market also offers healthy prospects, as three is usually seen as the sweet spot for towercos in terms of customers in Africa; less than this limits opportunities for colocation, while few African markets can support several healthy MNOs; competition erodes ARPUs which limits operator investments in network growth. MTN’s has 62% market share but Airtel remains highly competitive with 38.1%.
Rwanda’s 3rd MNO KTRN (Korea Telecom Rwanda Networks) is a joint venture between Korean Telecom (51%) and the Rwandan government (49%), was issued a 25-year license in 2013 and launched its 4G wholesale network in 2018 that reached 95% population coverage.
However, a decision by the government in 2022 as part of its National Broadband Network Policy revoked KTRN’s wholesale 4G monopoly, which both MTN and Airtel had previously had to use to resell to their customers.
As of Q323 Rwanda has 12.5mn mobile subscribers, LTE subscribers increasing sharply helped by national LTE-coverage achieved in 2018. Mobile also remains the dominant platform for voice and data services, and with the regulator removing KTRN’s exclusivity as a provider of wholesale access to its network, MTN and Airtel have recently increased activity building out their own networks.
Rwanda is one of Africa’s more advanced markets in mobile technology adoption, with 96% 4G population coverage achieved back in 2017 and preparations are underway to launch 5G services. However, coverage is largely constrained to populated and urban areas, and only 47% of Rwanda’s population have access to the internet.
Broadband adoption is becoming more common but is mostly used for household, enterprise and industrial connection, while most people rely on mobile broadband. With KTRN losing 4G broadband license exclusivity, there is big demand for mobile internet expansion.
Rwanda’s tower market has been led by IHS Towers, who has been active in the country since acquiring MTN and Airtel Africa's sites in 2014 as part of a multi-market sale leaseback signed with both MNOs.
Over the last 10 years, IHS has doubled their portfolio from 714 acquired sites to 1,434 through organic growth. 115 sites were built by IHS last year and 200 the previous year, with small numbers of sites built by TRES and other MNOs outside this, tower stock is estimated to be growing at around 10% per year.
Forming a competitive towerco landscape in Rwanda
TRES has ambitious plans to increase competition in the market, accelerating the role of local companies in Rwanda’s economic and social development, and encapsulates the intention of the company’s founder and CEO Venuste, who built TRES up from scratch.
With his background at MTN, Venuste saw an opportunity for a locally funded towerco that could help create competition and balance out the market. When speaking to representatives from Admaius, finding the right person to invest in was seen as a core part of their decision-making process, seeing the value in backing a local champion.
Competing in a market previously led by a single player, and a major international firm at that, would be no small task, and TRES presented a certain capability and vision that would be needed to achieve this.
Through their acquisition of TRES, Admaius plan to support the firm both in growing their infrastructure portfolio and in fostering the right talent, becoming a more favourable supplier to customers. TRES already has strong relationships with MTN and Airtel but has been challenged by the need for capital to drive scale and take on increasingly large build-to-suit projects, earning trust and commitment from its customers.
TRES is also utilising its IBS license to support government initiatives to further indoor coverage, with the regulator recently introducing new requirements for building developers to deploy indoor coverage solutions.
In line with Admaius’ development focus, it plans for TRES to play a bigger role in network coverage expansion into rural areas, in line with the ICT Ministry’s goal of reaching total geographic coverage. A universal service fund has been established to help incentivise and subsidise MNO rural deployments, supporting the business case to make rural coverage more commercially viable.
Other government strategies such as providing free smart phones to rural communities is helping further drive appetite for MNOs to expand their networks as SIM penetration goes up and demand for connectivity services increase. TRES plan to capitalise on these opportunities for both build-to-suit and colocation to grow their presence in the market.
TRES may find itself vying for rural builds with network-as-a-service provider AMN that has started to deploy rural sites for MTN late last year. However, there is often more demand than supply for rural infrastructure, and a range of tower designs will need to be utilised to achieve holistic geographic coverage.
With IHS Towers having already consolidated portfolios from Airtel and MTN, remaining M&A is limited, but TRES still has some opportunity for smaller acquisitions to grow scale. KTRN still operates a tower network and there may be opportunities to engage in smaller acquisitions.
What they said about the deal
The acquisition also aligns with Admaius’ investment strategy to identify opportunities for high impact sectors that are key drivers of economic and social progress.
The deal was co-advised by African law firm’s Asafo & Co. And ENS Africa and advised by Rwandan corporate finance firms Gahirigo Capital and BK Capital.
Commenting on the deal Marlon Chigwende, Managing Partner for Admaius, said “we are excited to be investing in Rwanda, one of the fastest growing markets in Africa. GDP growth has been strong, sustainable, and relatively broad based.
“Our investment in Tres will help to expand network coverage to rural parts of Rwanda, as well as aid the rollout of 4G, and ultimately 5G over time. In addition to capital, we are bringing experienced Towers experts to support in strengthening the Tres business.”
Venuste Twagiramungu, CEO of TRES, commented “Admaius Capital Partners' investment has come at the right moment. With their expertise in fund management, they are bringing not only the financial backing that we need but also their organizational capabilities that will transform TRES into a true corporate.
“From this exciting journey we are expecting no less than a fast expansion and a true contribution to the Rwandan objective of more than 95% geographical coverage.”
