TowerXchange’s analysis of the independent tower market in Africa and the Middle East

For the latest version of TowerXchange’s analysis of the tower industry in Sub-Saharan Africa visit here.

For the latest version of TowerXchange’s analysis of the tower industry in MENA visit here

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Q4 2017 saw a major milestone in the region’s tower industry, with the announcement of the Middle East’s first tower deal. Whilst sub-Saharan Africa has seen over 30 tower transactions of scale completed, the announced sale of Zain’s 1,600 towers to IHS Towers, in partnership with Towershare, signifies a new dawn in the Middle East. Exclusive talks are also underway between the three parties regarding Zain’s 8,000 Saudi Arabian towers, with regional investors expressing an interest in putting capital into the venture. In the Q4 edition of the TowerXchange journal we take a deep dive into the Kuwaiti deal and what it means for the Middle Eastern tower industry.

In sub-Saharan Africa, the vast majority of major tower transactions have involved either American Tower, IHS Towers, Helios Towers or Eaton Towers as buyers. The four players now collectively own 36% of SSA’s towers across a total of 14 different markets. Whilst American Tower, with a global portfolio of over 150,000 towers are listed on the New York Stock Exchange, Africa’s three large privately owned towercos are all understood to be gearing up for IPOs in the first half of 2018 (read our Q4 analysis of the upcoming IPO activity).

As the big towercos look to their next liquidity event, new build-to-suit towercos continue to emerge either with alternative value propositions to the big four (for example Pan African Towers’ proposal to price contracts in local currency in Nigeria), or in markets where the big four are not present (with Angola, Algeria and Namibia just some to mention).

In parallel, a range of different companies are starting to offer an ESCO model on the continent in response to MNO appetite to explore alternative outsourcing strategies. 2017 has seen a host of ESCO agreements signed, with Airtel striking a deal with ENERGY VISION in Gabon, Millicom with Aktivco in Chad and Orange with GreenWish Partners in the DRC; with the latter MNO having several further RFPs issued. If the past few years have been about tower transactions in sub-Saharan Africa, 2018 and beyond looks set to see Middle Eastern divestments and African ESCO agreements come to the fore.

For sub-Saharan Africa’s towercos, new build requirements are reportedly picking up in a number of markets and amendment revenue continues to grow as operators upgrade technologies. Bolt on transactions in existing markets (such as Helios’ 2017 acquisition of Zantel’s mainland sites in Tanzania) present further growth opportunities and towercos keep a watchful eye on sale and leaseback opportunities in as yet untouched markets.

Whilst towercos continue to drive top line growth, significant emphasis is also currently placed on cost control measures to improve overall profitability. Operational efficiency and supply chain optimisation are at the heart of the more sophisticated towerco business models. Such efficiency improvements are further driven by investments in energy upgrades, as hybrid solutions move from pilot studies to widespread deployment. If promising results from lithium ion battery pilots continue to be seen, it won’t be long before the technology starts to make it into the mainstream.

We were delighted to hold our 5th Meetup Africa & Middle East earlier in the quarter, welcoming well over 300 tower industry leaders to Johannesburg once again. As we enter 2018 we look forward to seeing developments in the Middle Eastern market, towerco IPOs and ESCO business models as the industry continues to mature.

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Algeria

There are 18,000 towers split between the three operators; Djezzy (7,500 sites), Mobilis (6,000) and Ooredoo (4,500). Mobilis have gone to tender to appoint six companies to build 1,400 new sites, Djezzy have a master plan to deploy 150-200 sites per year having launched a tender in December, and Ooredoo have launched a site builder tender to deploy a modest number of sites. There is little infrastructure sharing in the country with many sites unsuitable for additional tenants and disagreements between operators on what sites are a fair trade. The vast majority of sites are on-grid with very few generators and with low diesel costs. Whilst Djezzy had looked at a tower sale, restrictions on foreign direct investment in the country suggest there will be no transactions in the near term.

Angola

Angola has two MNOs, Unitel and Movicel with Unitel having around about two thirds of the market share in terms of subscribers and Movicel the other third. Unitel has the larger portfolio of towers, possessing 1,700 sites and Movicel is a relatively young network with just 800 sites. In order to reach the level of coverage they are targeting, Unitel needs to add a further 1,000 sites and Movicel a further 2,000. There is a high degree of competition between the two operators and as such, they have been reluctant to share infrastructure in the past, however, in 2016 a new law came into force, prohibiting the construction of new sites in close proximity to existing ones, thus necessitating infrastructure sharing in the country. ANTOSC are Angola’s first independent towerco, with plans to add 300 sites in the next three years, whilst TowerXchange has been made aware of at least one other company in the process of registering as a towerco in the market.

Burkina Faso

Orange have completed the acquisition of Airtel’s local opco which had previously agreed the sale of their ~500 tower strong portfolio to Eaton Towers in the country. Orange have recently signed an ESCO agreement with Energy Vision to take over management of energy on 120 of their own towers, a number which could increase to 200. Airtel was the number two operator in the country with a market share of around 25%. Etisalat’s Onatel was the leading operator in the market with Telecel the third operator. 3G was launched in the country in 2013 but mobile broadband penetration sits at just 7% in a country of some 18.4mn.

Chad

There are an estimated 2,000 towers in Chad, a country where electrification sits at just 4%. To address power issues, Millicom has signed an ESCO contract in the country with Camusat’s Aktivco (although neither party is yet to publicly confirm the agreement). Airtel had previously agreed the sale of their towers to Helios prior to the transaction being cancelled because of an unfavorable regulatory environment. Millicom are looking to exit the African market, with Econet reported to have expressed an interest in acquiring their remaining opcos in Chad, Rwanda & Tanzania.

Congo Brazzaville

Helios Towers Africa is the sole towerco in Congo Brazzaville, having closed a deal to acquire Airtel’s 394 towers, representing around 44% of the country’s towers. Negotiations to sell Airtel’s Congolese opco to Orange lapsed, but MNO consolidation is not a new phenomenon in Congo, Airtel having acquired Warid’s operation in the country in 2014 vaulting them over MTN to become market leaders. BinTel’s Azur are ranked a distant third.

Cote d’Ivoire

IHS own or manage a portfolio of 2,599 towers, having acquired sites from MTN and entered into an MLL arrangement with Orange. Number three MNO, Moov still retains their tower portfolio which numbers about 1,000 sites.

The regulator had previously revoked the operating licenses of smaller operators Comium, Cafe Mobile and GreenN in the market before awarding and then subsequently revoking a license from LPTIC (GreenN’s backer). There are understood to be about 400-500 sites which were previously owned by the different parties, with a significant degree of parallel infrastructure.

Overall estimations suggest that the market needs a further 2,000 towers to be added between all operators within the next three years. With regards to power, Orange stated that diesel accounted for 36% and grid 64% of total energy costs in the country and IHS has invested heavily in upgrading their energy equipment, with over 70% of its sites now equipped with solar hybrid solutions.

DRC

There are five MNOs in the DRC; Vodacom, Airtel, Orange, Supercell and Africell, with Smile planning to launch 4G services by the end of 2017. Helios are the country’s only towerco having acquired first Millicom’s and then Airtel’s towers in the country. The Millicom deal, involved the operator retaining a 40% stake in Helios Tower DRC which they then restructured to a 24% stake at group level (a stake which they are now looking to monetise). Helios’ acquisition of Airtel’s 950 sites spurred a major decommissioning program, involving the removal of 150 duplicated sites. Helios have also built well over 100 new sites in the country.  Infratel claims to have built over 800 rural sites for Vodacom DRC. With around 4,350 towers serving 48.75mn connections, DRC has one of the highest number of SIMs per tower in the world at 11,207, illustrating the DRC’s huge growth potential.

Grid power is reasonably reliable in Kinshasa, but less reliable in Lubumbashi and Goma. Almost all sites outside these three cities are off-grid and the delivered cost of diesel can be 2.5x more expensive in rural areas, with Helios’ average cost of diesel per tower over double that in its other markets. The towerco deployed solar at 51 sites in the country at an average cost of $33,900 per site. Since implementation, Helios report that in the DRC the sites with installed solar power technologies have averaged a per site decrease in diesel usage of 915 litres per month; at an assumed price of $1.64 per litre in in the DRC, this equates to annual diesel cost savings of $18,000 per site. Helios has identified 400 further sites suitable for solar and play to deploy solar at 150 sites in 2017. Orange have recently signed an ESCO contract with Greenwish Partners to take over energy management of 250 sites, deploying solar-hybrid solutions with their partners Sagemcom.

Egypt

Egypt has over 20,000 towers split fairly evenly between the three MNOs. Infraco licenses have been awarded to Alkan, Mobiserve, EEC and HOI-MEA with only the latter reporting an owned portfolio of sites.

In April 2016, Eaton announced a US$131mn acquisition of 2,000 MobiNil towers – an estimated third of the total owned by the opco (which was rebranded to Orange following a 99% buyout by the company). The deal however was cancelled with the Orange board failing to extend the long stop date for completion of the deal and with Orange also still missing some approvals from the regulator. Orange have since issued an ESCO RFP in the market, with the operator understood to not currently be considering any further tower deals. Eaton, however, remain committed to opportunities in the Egyptian market should they arise. In a statement to TowerXchange, Eaton’s CEO Terry Rhodes said “Eaton Towers still regards Egypt as a market ready for independent tower companies. The imminent roll out of 4G, together with the economic and political changes which have made US dollars very scarce mean the operators will be under financial and operational pressure to expand their networks. It would be enormously beneficial for this expansion to share infrastructure.”

4G licenses have been awarded to each of the operators with Telecom Egypt having also obtained a license, making it the country’s newest mobile operator.

With SIM penetration of 101%* and mobile broadband penetration of 42%*, plus an established culture of infrastructure sharing in the country, the potential for towerco profitability is good in Egypt. While 3G coverage is currently fairly extensive Egypt still has more SIMs per tower than any other country in MENA (4,690 versus the regional average of around 2,500), illustrating potential for new tower builds.

Grid connections for Egyptian tower sites are slow and expensive, so DGs are widely used – the business case for renewables may be boosted if fuel subsidies, which currently mean diesel is around a fifth the cost of other African markets, are reduced.

Gabon

Airtel’s efforts to monetise their towers in Gabon never made much headway, so all the country’s towers remain MNO captive for the time being.

Airtel is deploying LTE, but mobile broadband penetration was still negligible in Gabon at the end of 2014. Whilst the electricity grid in the main cities is okay, the grid is much less extensive in more rural areas leading to 30-35% of the country’s ~1,000 sites being off-grid. Energy Vision have signed the first real ESCO contract in Africa with one of Gabon’s MNOs, offering power on a fixed monthly price with no upfront capex. The project encompasses a full solar hybrid system with CDC batteries and will cover 150 off-grid sites, with a view to extend this to sites on unreliable grid.

The regulator has approved the merger between market leader Gabon Telecom (owned by Maroc Telecom) and number three operator Moov (owned by Maroc Telecom’s parent company, Etisalat). The merger will give the new entity 55% of the market share. Azur (BinTel) is the country’s fourth MNO.

Oil and Gas wealth partly accounts for Gabon’s regional high GNI/capita of US$10,000 which has resulted in the country’s 162%* SIM penetration rate.

Ghana

There are three major towercos active in Ghana, which have been snapping up tenancies for over three years. Back in 2010, Helios Towers Africa set up a joint venture towerco with Millicom Tigo as minority partners, to which 750 towers were transferred. Shortly afterward Eaton Towers closed their deal with Vodafone Ghana, then American Tower set up another joint venture with MTN to which 1,876 towers were transferred. The latest transaction in the market was the sale of Airtel’s towers to Eaton which was finalised in 2015.

Whilst grid coverage and availability is good by African standards (with one towerco reporting over 95% of sites to be on-grid and availability trending towards 20 hours a day), electricity prices have skyrocketed in the past year meaning that the business case for solar and hybrid is strengthened and the use of deep cycle batteries is growing.

With strict permitting and environmental policies in Ghana, it’s tough to get new towers built with fewer than 100 new structures likely to go up in the next 12 months; this does however amplify appetite for co-location with towerco tenancy ratios in the country already around two.

Airtel and Tigo have just recently merged in the market, leapfrogging them ahead of Vodafone but still in second place behind MTN. Smaller players, Glo and Expresso have less than 3% market share, with Expresso likely to rebrand to Celltel by the end of the year. In addition, there are three LTE only players - Surfline, Blu and Busy- in the market.

The devaluation of the Cedi hit all in the market hard and whilst it was the world’s worst performing currency a couple of years ago, it has begun to stabilise and economic conditions in the country are starting to improve.

American Tower is partnering with Energize the Chain to provide vaccine refrigeration at a further 50 cell sites, in addition to the 35 at which these life- saving systems have been installed.

Ghana has a population of 28.0mn people and a mobile penetration rate of 133%, the second highest in ECOWAS and the 8th highest in Africa.

Iran 

Iran is the Middle East’s largest mobile market with 118mn subscribers. There are three national operators in the country of which MCI (Mobile Communication Company of Iran) is the largest with 61.3mn subscribers and 43% of the market share. MTN-Irancell, a joint venture in which MTN holds a 49% stake, is Iran’s second largest operator with 45.5mn subscribers and 40% of the market share; and RighTel, is the third largest operator with 9.5mn subscribers and around 8-9% market share. In addition to this there are a number of FCP players and WiMAX operators who make up the balance of the market share.

There are currently around 38,000 towers in the Iranian market and with very little infrastructure sharing between the operators there is a significant degree of parallel infrastructure. In 2014, Fanasia, an Iranian company with a background as a turnkey service provider to the country’s MNOs, started their own towerco business. Their first project on Kish Island, conducted with the support of the Kish Free Zone Organisation, was to rationalise the number of towers on the island. With 110 sites on the Island, each with a single tenant and unsuitable for the addition of further tenants, Fanasia built 27 new sites which the operators were mandated to use, whilst existing sites were decommissioned. The municipality benefited from a revenue sharing model on top of the land rental fee and further benefited from the freeing up of land under the old towers. Following the success of the Kish Island project, Fanasia reached a similar agreement with the municipality of Mashhad, Iran’s second most populous city to develop a core network of 350 sites in March 2016. Fanasia currently owns 106 towers.

In early 2017, in response to the growing trend towards infrastructure sharing in Iran, a new tower company, Iranian Towers, was formed. The three shareholders in the company are MCI and Rightel, Iran’s second and third largest operators and Fanasia, Iran’s first towerco. The first phase of Iranian Towers’ operations will be the construction of approximately 1,000 new sites which are capable of accommodating multiple tenants. These sites will be constructed primarily in the major cities in order to accommodate 4G and 4.5G rollout. The new rollout will include both ground based and rooftop sites and will be conducted with the coordination of municipalities who will benefit from revenue sharing on the sites. Iranian Towers now own 114 sites.

Kenya

Market leader Safaricom, which has 69% market share, owns 4,100 of Kenya’s 6,600 towers. Eaton Towers entered the market following the acquisition of Airtel’s sites and currently have a portfolio of 1,200 sites in the country.  After having been taken over by Helios Investment Partners in 2016, Telkom Kenya is reportedly examining potential growth strategies including a takeover of rival Airtel Kenya and has also initiated a process to sell its ~1,000 towers in the country, towers which both Eaton and American Tower are competing for.

TowerXchange have also been made aware of a new towerco, SEALTowers a start-up focussed on low cost compact tower site solutions and hybrid power innovations which expects to have 500 sites built by Q3 2018.

Extensive new build is required, with Telkom stating their intent to add 500 new sites; towercos have proven the most cost effective way to add new sites for all MNOs. Safaricom plan to double the number of 4G base stations by the end of 2017 whilst Airtel and Telkom Kenya are in the pilot phase. Telkom’s sites may require significant upgrade work.. Around 500 buildings are suitable for DAS with a hundred or so covered already; Safaricom are currently operating shared DAS networks. The grid is relatively robust in Kenya however Safaricom’s internal towerco, which offers co-location on around 800 of the MNO’s sites, is starting to offer power as a service, creating opportunities for energy companies to work with the market leader.

Kuwait

Market leaders Zain, have agreed the sale of their 1,600 towers to IHS in partnership with Towershare for $165mn. Ooredoo and STC’s Viva are Zain’s competitors in the market and with little infrastructure sharing between the MNOs, significant parallel infrastructure exists. With population coverage at 100%, any organic growth for towercos entering Kuwait must be driven by network densification rather than extension, and decommissioning must also be part of the business plan. Zain are currently exploring 5G in the market, with Kuwait positioned to be one of the MEA pioneers in this field

SIM penetration was at 192%* with mobile broadband penetration at 81%* in Q4 2015.

Madagascar

TELMA, Orange and Airtel operate in the Madagascan market with ISP Gulfsat Madagascar (operating as Blueline) having become the country’s newest MNO. In spite of tough economic conditions, the government has a key focus on improving connectivity in the country, with SIM penetration standing at just 31%* and mobile broadband penetration 19%* at the end of 2015.

TELMA is in the process of rolling out 4G and optical fibre in the country, with Orange also having also launched 4G operations in the capital, Antananarivo in March 2017.

Towerco of Madagascar (TOM), initially spun out of TELMA but now an independent towerco in it’s own right and operates a portfolio of 1003 sites in the country, just under half of Madagascar’s total towers.

Madagascar represents one of the few markets where Airtel still retains its towers, with the MNO owning a portfolio of 500 site sin the country. There had been rumoured interest in an acquisition of Airtel’s towers, followed by reports that the MNO had signed an ESCO contract although TowerXchange understands that the opco has decided not to pursue this, instead favouring a review of its managed services contract to bring down costs.

The operational challenge of operating a distributed tower network, particularly during the rainy season is not for the feint hearted, and with significant energy challenges in the country, (Airtel report that 50% of its sites are off-grid) TOM has been extensively evaluating a number of different energy options including a pilot of a wind project in the country.

Malawi

Eaton’s deal to acquire Airtel’s towers in Malawi was cancelled in late 2015, and at present it doesn’t look like the towers will be brought back to market. Mobile services are among the most expensive in Africa in Malawi, contributing to SIM penetration of just 38%*, and mobile broadband penetration of 15%*. The end of 2015 saw a third MNO, Lacell, being awarded a license in the country which is hoped to increase competition, lowering prices and increase service quality.

Mozambique

The entrance of a third MNO Movitel back in 2012 caused a radical shakeup of the telecoms sector with the operator rapidly deploying their network and securing 49% of the mobile subscriber market share by the end of 2015.

The country has an estimated 3,000 foundation-based towers, supplemented by an additional 1,800 guyed masts (primarily owned by Movitel). Fibre rollout to the tower has been relatively extensive, resulting in microwave backhaul dishes being removed from sites, thus freeing them up for further active equipment.

Infrastructure sharing in the country has been limited, with a just an estimated 50 towers being shared between mCel and Vodacom. The government passed a first reading of a bill mandating infrastructure sharing in November 2015, however talks appear of have stalled. The government has however been putting pressure on operators to share infrastructure in rural areas to meet the country’s universal service access goals, a country where 68% of the population lives in rural areas.

State-owned mCel has long standing debts and has appointed Barclays to oversee the sale of its ~1,000 towers in order to reduce leverage. In July 2016, it was announced that mCel would be merged with fixed line incumbent TDM to create a single more sustainable entity. In addition to their own towers, mCel use TDM’s network and it is not yet clear how the sale of mCel’s towers will be affected by the merger.

There has also been speculation of a potential tower sale at Movitel although a formal process has not been announced. Rumour has it that the entrance of Movitel into the market was part of a government plan to expand network infrastructure and then sell the assets. If this were the case, the decision to sell may be more likely to come from FRELIMO than Viettel.

As to who the likely bidders would be in a Mozambique tower sale from either mCel or Movitel, it is not yet clear - the talks don’t appear to have attracted the interest of the continent’s leading towercos.

In late 2013, a domestic company, TowerCo Mozambique, tried and failed to set up towerco operations in the country. It is thought that the company was unable to reach an agreement on lease rates with mCel and Vodacom and as such, talks were disbanded. We have yet to hear rumours of any other domestic players forming in Mozambique.

There are 19.2mn* mobile connections in Mozambique with SIM penetration sitting at 68% and mobile broadband penetration at 34%*.

Namibia

The Namibian mobile market has been dominated by two government owned MNOs: MTC and Telecom Namibia, although the entrance of privately held Paratus following an overhaul of the country’s telecoms regulation has introduced a new level of competition.

PowerCom, owned by MNO Telecom Namibia, is Namibia’s first dedicated infrastructure player. Managing a portfolio of 300 towers, the company has ambitions to integrate further assets into its portfolio and in the long term plans to bring solar to its sites to make use of the country’s abundant sunshine. The company has tenancies from all three operators in the market as well as a number of non-traditional tenants.

The Communications Regulatory Authority of Namibia has proposed a new regulation pertaining to mandatory infrastructure sharing where operators will no longer be allowed to set up new infrastructure where there are existing sites. An announcement from the regulator is expected imminently regarding the legislation. The government have also introduced a network facility license category to regulate a designated infrastructure provider in the country.

Whilst the country’s electricity grid is extensive, the power crisis hitting Southern Africa has had a knock on effect on Namibia and as such, the operators are exploring alternative energy strategies as a means as protecting against risk to the site uptime.

Namibia has 2.8mn* mobile subscriptions and SIM penetration rate of 114%*

Niger

There are four MNOs in Niger; Airtel, Moov, Orange and Sahelcom. After Airtel agreed the sale and leaseback of 600 sites to Eaton, the transaction is now closed and Eaton is in the process of integrating the sites into its portfolio.

Over 50% of the country’s towers are off-grid with Eaton examining renewable energy options (including the repair/ replacement of 200 solar sites the company has inherited) and Orange issuing an RFP for an ESCO.

New build requirement in the market is thought to be relatively conservative although Eaton is undertaking some for Airtel.

Nigeria

Nigeria is a benchmark tower market for many reasons. It’s the largest mobile market in SSA, with 154.3mn* connections among a population of 184.6mn*. It’s the oldest growth independent towerco market in Africa; towercos have been building towers in Nigeria since 2006. Almost half of SSA’s towerco-owned towers are in Nigeria, and over US$2.5bn has been spent by towercos to acquire 79% of Nigeria’s towers. Towercos have proved their ability to deliver 99.9% uptime in challenging grid conditions in Nigeria. Nigeria is not just a benchmark for African towers, it’s proof of the efficacy of the independent towerco model in any emerging market.

American Tower entered the Nigerian market in 2014 following an acquisition of Airtel’s 4,700 towers, whilst IHS acquired the portfolios of Etisalat and MTN in the same year.

2016 marked a challenging year for the Nigerian economy, with the country shrinking into recession, devaluation of the Naira and dollar shortages in the country. As a result of the economic downturn, EMTS (Etisalat’s opco in the country) defaulted on loan repayments. With debt restructuring talks with its lenders failing, investor Mubdala exited its 40% stake in the country and Etisalat Group was ordered to  transfer its 45% stake to United Capital Trustees, the security trustee of the opco’s consortium of lenders. Etisalat Group terminated their management and support agreements with EMTS and ordered the business to rebrand, with the company now operating under the name 9mobile. Barclays had been appointed to oversee the sale of 9mobile, with the bank reportedly receiving 16 expressions before 10 bidders made it through prequalification. At the time of going to press, Barclays were reported to have pulled out of its role after questioning by the Central Bank of Nigeria over the transparency of the bidding process.

Competition for BTS opportunities is increasing among Nigeria’s towercos. Most commentators agree Nigeria needs to double the country’s current stock of towers and despite market leader MTN’s financial challenges as a result of the NCC’s fine, MTN have announced ambitious rollout plans for 2017.

Such spend covers an extensive network rollout which includes the addition of 3G and 4G infrastructure to 7,345 existing towers as well as the addition of 3,904 new sites by the end of 2017. As part of this, IHS are known to have been awarded a build-to-suit program involving the addition of 1,650 new towers as well as the addition of approximately 2,000 tenancies to existing sites.

In order to fund the build to suit program and refinance the debt taken on following the acquisition of HTN towers completed last year, IHS’ Nigerian subsidiary has issued a US$800mn high yield corporate bond which was listed on the Irish Stock Exchange with a high level of appetite from investors.

Nigerian cell site energy efficiency programmes are also becoming a benchmark for the rest of Africa, with battery hybrids widely deployed and solar being added, particularly in the north of the country. IHS’ “Big Five” project in the country is one major initiative designed to replace power generation systems on 15,000 sites with cleaner, more efficient solutions. IHS have selected five companies to each upgrade a portfolio of 2,500-3,000 sites, thus enabling the towerco to benchmark different technologies and identify the most efficient and effective energy solution for its largest market.

Read our latest detailed study of the Nigerian market “The health of the Nigerian tower industry at the end of 2017.”

Rwanda

IHS has acquired both Airtel’s and MTN’s Rwandan towers and, after having added build-to-suit towers and undertaking decommissioning work, now owns a portfolio of 786 sites. As a small market, new build is limited and decommissioning is still required.

Rwanda is home to three tier one MNOs, so has no shortage of credit worthy tenants. MTN leads the market, followed by Tigo and Airtel. Korea Telecom secured a joint venture with the Rwandan Ministry of Youth and ICT to build a nationwide LTE network.

IHS have announced that they are assessing solar farm opportunities in Rwanda that could potentially supply power to the national grid in the first ‘energy swap’ model to be used in Africa.

Of all the SSA regions, Rwanda is showing some of the strongest promise in small cells and DAS making it a key target for such companies looking to enter Africa; IHS have explored shared DAS.

SIM penetration sites at 75%* with mobile broadband at 35%*

Saudi Arabia

There are over 34,000 towers in Saudi and whilst population coverage is complete, an additional 3,500 – 4,000 new macro sites need to be added in order to bring >10MB broadband coverage to rural areas by 2020. In addition to this, a further 1,000-2,000 new sites are estimated to be required to meet growing data usage in urban areas.

Saudi’s three operators, Saudi Telecom Company, Mobily and Zain are all in the process of considering their tower strategies. Having initially entered into exclusive negotiations with TASC Towers to sell their towers, Zain are now in exclusive negotiations with a consortium involving Towershare and IHS Towers to sell their 8,000 Saudi sites (having already entered in exclusive negotiations to sell their Kuwaiti sites to the latter).

Both Mobily and STC (owning 9,600 and 16,400 sites respectively) had also considered tower sales before abandoning the processes and announcing their intent to form a joint venture towerco. Whilst the two had issued a RFP to appoint an advisor for the joint venture, and it emerging that they were looking for a third party to get involved, plans for the JV appear to be on hold whilst they reconsider all their options.

Senegal

Expresso Telecom has agreed the sale of their 450 towers to newly formed towerco, Al Karama Towers. The sale and leaseback transaction also includes first right of refusal on new build for Expresso, with the operator planning to add an additional 200-250 sites in the next twelve months as part of the regulatory mandate for MNOs to increase coverage to underserved areas of the country.

There is a high level of parallel infrastructure in Senegal as infrastructure sharing in the country has been limited, things have however started to change. Tigo and Expresso currently share 45 sites in the country and there is strong expectation that this will increase with the formation of the new towerco.

Sonatel (in which Orange has a controlling stake) had reportedly looked into a sale of its 2,100 towers previously but talks failed. Millicom is selling its opco to a consortium involving NJJ, Sofiman and Teyliom Group after having abandoned the sale to Wari. Tigo currently has 800 sites in the country; should the eventual new owners look to divest their towers, they would make an interesting acquisition target for Senegal’s new towerco.

Sonatel is the only operator to possess a 4G license in the country but Tigo and Expresso have expressed a strong interest in securing licenses, with the sale of Expresso’s towers designed to raise capital for such a license.

In February 2017, the Senegalese regulator, ARTP granted three new ISP licenses to locally owned entities, following in the footsteps of Hayo which is providing coverage in the Matam region. The introduction of the new ISPs is hoped to reduce consumer prices and improve the quality of service; it also presents additional tenants for the towerco.

There have been reports that a joint venture between South Korea’s SK Telecom and Middle Eastern firm CKG Group has applied for a fourth MNO license in the country, in a bid to access Senegal’s nascent LTE market.

There are 14.6mn* mobile subscriptions in Senegal and a SIM penetration rate of 96%*. Mobile broadband penetration has increased 64% YoY to 14%*.

South Africa

Towercos have struggled to get a foothold in the South African market since Cell C sold their portfolio to American Tower back in 2010 and the MNO has recently announced that they plan to build approximately 600-800 towers each year for the next four to five years, in order to develop their own portfolio once again with a view to commercialising its sites.

Telkom, who’s towers had previously been the subject of speculation, have similarly developed a passive infrastructure team to actively pursue co-locations on their sites, recently carving out of its tower assets into a separate entity, Gyro Towers. Active in both the fixed line and wireless sector, Telkom has one of the largest real estate portfolios in South Africa which executives believe should be contributing more earnings to the business. The currently have a portfolio consisting of around 3,500 sites.

Vodacom has developed a successful commercial towerco business model in house, including a platform on which other frequency holders can view available space on Vodacom sites.

After a turbulent year for MTN following their record fine from the Nigerian Communications Commission (reduced from $5.2bn to $1.7bn), the South African company have appointed a new senior management team with a new CEO and new head and deputy head of M&A appointed. The operator are yet to give any clues as to whether a sale of their 9,000 tower strong South African portfolio could be back on the cards to offset the fine but with their CEO hailing from Vodafone (who have traditionally chosen to retain their passive infrastructure) we don’t expect any quick decisions, with the listing of MTN Nigeria on the stock exchange being the first step to raise the necessary $1.7bn.

In terms of towerco activity, the biggest news in recent years was American Tower’s acquisition of Eaton Towers’ portfolio of 300 towers. “Eaton Towers’ strategy in South Africa was to establish a build-to-suit presence and then scale up by buying a substantial portfolio of towers from one of the operators,” said Eaton Towers CEO Terry Rhodes in an exclusive TowerXchange interview. “However, the operators in South Africa have not given this opportunity, and they still own over 90% of the total towers. We have outperformed American Tower in South Africa over the last few years but our operation is about 1% of the total South African market, so when American Tower approached us it made sense to sell,” added Eaton’s Rhodes.

Atlas Tower is South Africa’s fastest growing towerco, having increased their site count to 422 sites, a number which is expected to hit 435 by the end of 2017. Sentech promotes 340 broadcast towers for co-location, while there is a long tail of smaller towercos in the South African market, including Eagle Towers, Coast to Coast, Blue Sky Towers, Comco and Pro High Site Communications.

Sierra Leone

Orange has completed the takeover of Airtel’s opco in Sierra Leone in partnership with its Senegal based subsidiary, Sontel. Significant investment is underway in the 3G infrastructure in the country, providing an attractive growth opportunity.

With four MNOs, the country has a 4.5mn* mobile subscribers and a SIM penetration rate of 76%*. Mobile broadband penetration sits at 23%, up 36% YoY.*

The market represents an attractive growth opportunity with significant investments in rolling out 3G infrastructure in the country.

Tanzania

Helios own 3,475 towers in Tanzania having acquired both Vodacom and Millicom’s portfolios in the country as well as Zantel’s sites on the mainland. In the Vodacom transaction, Vodacom sold 100% equity in the towers but obtained a 24% stake in Helios Towers Tanzania, a stake which Helios has since purchased. In the Millicom deal, Millicom and Helios formed a joint venture in which, Millicom held a 40% stake, the 40% stake was then restructured into a shareholding at Helios’ group level, a stake which the operator is now looking to monetise.

In 2016, Airtel agreed the sale of the 1,350 sites to American Tower, but the deal was cancelled. One of the biggest contributing factors to the calling off of the deal was the introduction of a new legal requirement for telecoms companies to list a 25% stake on the Dar Es Salaam stock exchange; a ruling which was introduced after the deal was announced and a ruling which applies to towercos as well as operators. Vodacom have been the first company to issue their IPO prospectus but with limited liquidity in the local market, the process has had to be opened up to international investors.

In addition to Tigo, Vodacom, Airtel and Zantel, Smart, Halotel and TTCL are present in the market, with each of the main MNOs dominant in a different part of the country.

In July 2016, it was announced that each of the three main MNOs have entered into a RANsharing agreement to improve coverage in rural areas.

Uganda

Eaton Towers has added Airtel’s Ugandan towers to the 700 towers they acquired from Orange and Warid back in 2012. Airtel since acquired Warid, while Orange sold out to Africell. Uganda remains ripe for further in-market consolidation, with seven licensed MNOs. American Tower is also active in Uganda, where they have a joint venture with MTN which owns 1,393 towers.

There are still around an additional 3,500 towers to be added to Uganda’s total of 3,485; growth rate was 17% between 2012 and 2014 but has since slowed to 10% as MNOs opt for co-location on existing sites. Eaton Towers and American Tower are handling the majority of new build.

Around 27% of sites are off-grid, with about half of new build being off-grid, grid outages are common, even in Kampala, meaning that lots of investment is going into hybrid solutions. Eaton currently have a pilot study underway to assess hybrid solutions under both capex and opex models,

SIM penetration is just 72%* in Uganda, with multi- SIMing meaning actual penetration is under 50%*. Mobile broadband penetration is low with only 13% of the population having a smartphone.

Zambia

IHS acquired the towers of market leaders Airtel Zambia to supplement their 2014 acquisition of MTN’s Zambian 719 towers which bolstered by new build, gives them 1,960 towers in this this ~2,300 tower market.

The Zambia Information and Communications Technology Authority has announced that it in the process of revising the telecoms licensing framework in the country. Under the new structure, any operator of data services will be allowed to apply for a permit to provide VoIP enabling the country’s ISPs to extend their services. The news has been welcomed by Vodafone Zambia who currently holds a license restricted to offering internet services only. On successful obtaining a permit, Vodafone would be able to provide voice over their LTE network, thus introducing competition for the MTN, Airtel and Zamtel in the market.

Zimbabwe

There are an estimated 2,700 towers in Zimbabwe, of which Econet Wireless own 1,500 with NetOne and Telecel splitting the balance between them. New legislation mandating infrastructure sharing is shaking up the Zimbabwean market with frictions between privately owned Econet and state owned NetOne and Telecel. The government had been keen to promote infrastructure sharing in a bid to reduce costs, however with Econet having invested more heavily in their infrastructure rollout than its two competitors, there had been some concerns voiced from the operator.

The Zimbabwean government’s Universal Service Fund will invest $250mn in the deployment of 600 towers in rural areas. The deployment will be managed by the country’s regulator, POTRAZ and will be coordinated with the country’s three MNOs with the three operators set to use the towers under a network sharing agreement.

(*Source: GSMA Intelligence, Q4, 2015)