Eastcastle Infrastructure target 1,000 BTS sites

What do you do after building and selling one of Africa’s leading towercos? Do it again. Peter Lewis and Pankaj Kulshrestha formed Eastcastle Infrastructure earlier this year with backing from Adenia Partners, AIIM and the IFC. In the last few weeks, Eastcastle Infrastructure has signed build-to-suit contracts in the DRC with two MNOs and expects to follow with BTS contracts in Nigeria and the Ivory Coast soon. TowerXchange speaks with Peter Lewis, former CFO of Eaton Towers and Co-Founder of Eastcastle Infrastructure, about why he is back in business and what makes Eastcastle Infrastructure unique.

TowerXchange: Please introduce yourself, your history in the industry and why you have now formed Eastcastle Infrastructure? 

Peter Lewis, Co-Founder and Director, Eastcastle Infrastructure:

I have worked in African telecoms since its effective start in the early nineties. Originally as a telecom investment banker, where I supported amongst others, MTN and Airtel as start-ups. I then spent nearly ten years at Millicom/Tigo, where in Ghana in 2010 we completed the first sale and leaseback by an African MNO of a tower portfolio and effectively started Helios Towers. More recently, I was the CFO for nine years at Eaton Towers, until its sale for US$1.85bn to American Tower at the end of 2019.

Pankaj Kulshrestha, my Co-Founder and I decided to form Eastcastle because of the unfulfilled need for tower and tower related infrastructure in Africa. We also spoke with our key MNO clients, who strongly endorsed our return and “the need for a second Eaton”. So you could say we are back by popular demand!

TowerXchange: Can you please introduce the key team supporting you at Eastcastle Infrastructure as well as explain where you plan to operate? 

Peter Lewis, Co-Founder and Director, Eastcastle Infrastructure:

My Co-Founder Pankaj Kulshrestha was the COO at Eaton Towers and before that he managed many of American Tower’s towers in India. I have yet to meet anyone who knows more about towers than Pankaj. Our CFO, Julian Rennie, I have known since he helped start Standard Bank’s telecom business in the nineties. Lesley Morley our Head of Legal, Srivats Grandhe, our Head of Operations, and Prasanna Nagaraja, our Head of Procurement, were all with us at Eaton.

We have already launched and won our first build to suit orders from two MNOs in the DRC. We have licenses in both Nigeria and the Ivory Coast and are expectant of build to suit orders in both markets imminently.

TowerXchange: What is the Eastcastle Infrastructure USP? Are you offering anything different to the towerco incumbents in terms of lease rates, contract terms or tenor? 

Peter Lewis, Co-Founder and Director, Eastcastle Infrastructure:

Our USP is that our team has come from both the customer (MNO) and the supplier (towerco) sides of the business. So we understand the importance to our customers of being responsive and flexible, whilst achieving best in class build execution, uptime and reliability.

As an entrant in markets with established towercos rather than set and justify the “market rate” as the first towerco, we are able to benefit from the existing lease rates and contract terms of our competitors.

TowerXchange: Africa has had a mature independent towerco market for more than half a decade now; what makes you think you will be able to crack open the market and find a niche for yourself? 

Peter Lewis, Co-Founder and Director, Eastcastle Infrastructure:

As I said we are back because our customers see a need for us. Whilst it’s still early days, service orders already received from two of the four MNOs in our first weeks of operation in the DRC is encouraging and endorses this need.

TowerXchange: Eaton Towers had a reputation as a low-cost provider, will you be building off a similar model at Eastcastle Infrastructure? 

Peter Lewis, Co-Founder and Director, Eastcastle Infrastructure:

Yes, most definitely. We owe it to both our shareholders and customers to be as efficient as we can without compromising on the quality of our service offering. I was very fortunate to have worked for Jan Stenbeck in the early 2000s, where I saw the benefits of lean, low-cost, efficient business models.

TowerXchange: How would you characterise Eastcastle Infrastructure’s power and data strategies? Will you be investing in renewables or relying on more on diesel? Is advanced site monitoring a priority for you? 

Peter Lewis, Co-Founder and Director, Eastcastle Infrastructure:

We are not prescriptive. Each tower we build is assessed to determine the most efficient and optimal power solution and site monitoring. We built and achieved best in class uptimes at Eaton in all terrains from mountains and jungles to the Sahara Desert. To my knowledge we were the only African Towerco to have four ISO certifications, including ISO 14064 for carbon emissions. We aim to repeat this achievement at Eastcastle.

TowerXchange: You were backed to the tune of US$130mn by Adenia Partners, AIIM and the IFC “ what does this mean for your capacity for building new towers? 

Peter Lewis, Co-Founder and Director, Eastcastle Infrastructure:

Yes this is sufficient to get us started by building over 1,000 towers. After a competitive equity raising process, including some of the largest investors in African telecoms and infrastructure, we selected and put this consortium together. We felt their knowledge and experience of being investors in IHS Towers and/or Helios Towers, allied with their ability to follow on with additional equity, to be the best fit for our needs.

TowerXchange: At the moment you are signing significant deals in large markets like Nigeria and the DRC; what is your appetite to invest in smaller markets too? 

Peter Lewis, Co-Founder and Director, Eastcastle Infrastructure:

As we are pursuing a build-to-suit strategy rather than a mix of acquisition and build-to-suit, we need to achieve in-market scale as quickly as possible. Nigeria and DRC offer us this scale within the shortest time, whilst also enabling us to showcase our operational capabilities in challenging environments. Again, following customer requests we are also launching and considering smaller markets served by only one towerco. Our business in the Ivory Coast is an example of this.

TowerXchange: Do you plan to follow the same exit strategy as Eaton Towers, or do you have something different in mind?  

Peter Lewis, Co-Founder and Director, Eastcastle Infrastructure:

Yes it worked, so we will try to repeat. However, it took us nine years to achieve this at Eaton Towers. So an exit is a long time away. Also, it might not be a single sale this time. You should always achieve a higher value from a trade sale, than suffering a discount to IPO. There is also something satisfying professionally if your peer group want to remove you as a competitor!

TowerXchange: Are there any key milestones you would like to hit before the end of the year? And where would you like to see Eastcastle Infrastructure in five years’ time? 

Peter Lewis, Co-Founder and Director, Eastcastle Infrastructure:

Yes, we would like the three launched businesses to be fully operational and having built or be in the process of building their first sites by year end. In five years’ time to have matched our achievement at Eaton, by being our customers’ preferred towerco in all our markets.