Monthly News Roundup: July 2023

Torrecom will be expandomg its tower portfolio in Latin America with the help of multilateral development bank IDB Invest with at US$30mn loan. The loan will help Torrecom to build, acquire, maintain and lease its telecom cell tower portfolio in Chile, Colombia, Ecuador, El Salvador, Guatemala, Mexico, Panama, Paraguay and Peru. IDB says the project is part of a regional credit facility including co-loans of up to US$40 million from development finance institutions Proparco and DEG. Torrecom expects to expand its tower portfolio in the region to reach 1,700 towers by 2024 (from around 1,400 today) but also plans to commercialise available space on existing and new towers with different mobile network operators to increase the utilisation rate of its tower portfolio.

Oi Brasil, the disappearing Brazilian operator, has completed the sale of selected tower infrastructure to Empreendimentos e Participacoes, an affiliate of comms infrastructure group Highline. The deal was originally announced in August of last year, at which time Highline owned more than 3,800 tower sites across Brazil. This deal involves another 8,000 telecom towers.

A preliminary purchase price of R$905.1mn ($187.2mn) has been paid, with the remainder set to be paid up until 2026, though this depends on the level of infrastructure usage. The sale could net Oi R$1.7 billion (US$350 million) in total. Whether this tower sale will ease Oi’s longstanding financial woes remains to be seen.

Chilean operator Entel announced that it will begin gradually shutting down its 2G network in 2024 to focus on developing its 4G and 5G networks. The operator will begin switching off its 2G network in mid-2024, and will cease selling new services over 2G from August this year. However, 100 sites will remain switched on as they will be the only means of tapping into connectivity for people, but they will eventually be replaced. The move will enable it to make more effective use of spectrum, as well as enhance customer experience and enable efficient energy consumption.

Latin America and Caribbean-focused multilateral development bank IDB Invest has closed a standby letter of credit for about US$47.5mn to Tigo Colombia to support the expansion and upgrade of telecommunications infrastructure in small municipalities in Colombia. The project will provide mobile broadband to 915 rural areas that are currently without coverage, allowing them to enjoy the benefits of digital connectivity and helping to close the rural-urban access gap. The project will help improve mobile services by aiding the transition from 3G to 4G LTE broadband in 340 municipalities. Previously, in January 2022, IDB Invest already offered financial support to Tigo for the deployment of telecommunications infrastructure in 177 localities that did not have access to mobile broadband.

Costa Rica has confirmed that it plans to commence its multi-band 5G auction on 23rd October 2023. The regulator Sutel (Superintendence of Telecommunications) will hold a consultation on the tender over the next few weeks to finalise the specifications and will publish the final details by 25th September. The concessions will be associated with specific coverage obligations. Within the first 12 months of receiving their permits, 700MHz licensees will be required to cover 60% of the specified 134 ‘priority districts’. The remaining 40% must be covered by the end of 24 months. Following the bidding process, Sutel expects to confirm the auction results on 19th December 2023.

MXT Holdings, a telecommunications infrastructure company based in Mexico, has received a major investment boost from a private investment house Ardian, which signed an agreement to acquire a 50% co-control equity interest in the company. Ardian's investment will be used by MXT Holdings to complete an asset swap for around 200 towers and an estimated 1,800 km of metro fibre from operator Telefónica, as well as strategic acquisitions that will increase MXT’s portfolio. The transactions will be funded using primary equity raised from Ardian and existing shareholder Mexico Infrastructure Partners (MIP), an asset manager in the infrastructure and energy sectors across Latin America. Going forward, Ardian will be a 50/50 partner in MXT alongside MIP.

Venezuela’s National Telecommunications Commission has published its National Telecommunications Plan for 2023-2025. Updates from the regulator have been sparse since at least 2020, so the document offers valuable insight into Venezuela’s goals for the sector over the next two years. The country has been in an economic spiral since 2014. Key objectives include phasing out 2G connectivity by end-2025, with 4G set to take its place. To replace 2G, around 2,100 new 4G cell sites need to be deployed by 2025, which will equate to roughly 90% population coverage. However, as much as 40% of Venezuela’s population has no internet access at all and demand still vastly outstrips supply. Still, the regulator appears upbeat – it has expressed its belief that a 5G trial will be underway before the end of 2023 and expects a 700MHz migration to commence in the same timeframe. It has earmarked 2024 for a public auction of 5G spectrum.

The Australian Communications and Media Authority (ACMA) announced plans to allocate a number of new area-wide licences (AWLs), which would accommodate more local area mobile broadband services in metropolitan, regional and remote areas. The regulator is proposing to carry out two spectrum allocation processes: one in the 3.4GHz-4.0GHz band in remote areas; and one in the 3.8GHz band in metro and regional areas. Spectrum in these bands is considered ideal for the delivery of mobile broadband services including 5G, private networks and other technologies’with the available AWLs allowing for area-specific use. The consultation will run until 1 August 2023.

India’s Minister of Communications and Electronics and Information Technology, Ashwini Vaishnaw, has announced the introduction of the Bharat 6G Alliance. This initiative is said to bring together key stakeholders from the public and private sectors to foster the development of 6G in India. India has already acquired over 200 relevant patents and listed the enhanced capabilities possible with 6G, including improved reliability, ultra-low latency and affordable solutions. The Bharat 6G Alliance will serve as a platform for comprehensive discussions on various facets of emerging telecom technologies and platforms that will shape the next decade. The aim of this initiative is to facilitate collaboration, knowledge sharing and strategic planning to ensure India remains at the forefront of technological advancements.

A 6G vision document was published in March outlining India's plans to develop and launch 6G telecom services within the next few years. The regulator suggests that at least 10% of 6G IPR should be from India by 2029 or 2030. In the meantime, India is moving quickly in the deployment of 5G networks, with 270,000 5G sites apparently in place already. Procedural and structural telecoms reforms are in place or on the way, all of which may boost 6G development in the country.

Axiata Group, Malaysia’s biggest wireless carrier by revenue, has a number of potential strategies under review to reduce its debt, estimated at 36.7 billion ringgit (US$7.9 billion). This is due to overseas expansion last year, including buying telecom towers in the Philippines and a broadband and cable TV provider in Indonesia. The company plans to sell stakes in some of its businesses, including a stake sale in its wireless tower unit EDOTCO Group, and list its technology units to reduce some of the debt related to this overseas expansion. In addition, PT Link Net in Indonesia, an established provider of cable television and high-speed broadband internet services, is being refocused as a fixed broadband infrastructure company. A stake sale may follow. Mobile operator PT XL Axiata is likely to be positioned as a converged mobile, fixed and content service provider. Founded in 2008, Axiata has 150 million subscribers for its services across Southeast Asia and Pakistan.

Malaysia approved Elon Musk’s satellite company Starlink to operate in the country and connect remote locations. Starlink will begin operations by connecting schools and higher education establishments. The move is part of plans to connect the whole of Malaysia to connectivity, satellite companies are seen as a key asset to the strategy. Around 3% of Malaysians face challenges when trying to access the internet due to lack of infrastructure brought on by terrain obstacles. Starlink recently gained licenses in Mongolia, Zambia, and Trinidad and Tobago.

Malaysia’s communications minister revealed the government has reached a deal outlining stakes in its wholesale 5G company Digital Nasional Berhad (DNB) for the nation’s five MNOs. The Malaysian Communications and Multimedia Commission worked on striking a deal with CelcomDigi, Maxis, Telekom Malaysia, U Mobile and YTL Communications. The MNOs are all processing and finalising their shares in DNB. Maxis was the last operator to sign up for the government’s controversial singular 5G network plan, having agreed to join its rivals earlier this month. The government is targeting to deploy 5G coverage to 80% of the population by the end of the year.

New Malaysian operator CelcomDigi will buy Huawei and ZTE equipment for its nationwide network integration and modernisation project. The project as one of the largest telecom network deployment projects in the country following the merger of rivals Celcom and Digi in December 2022. CelcomDigi will upgrade its RAN with the latest technologies from both Chinese vendors, to provide customers with wider coverage, high speeds and consistent service. The work will pave the way to a “seamless” transition to a new 5G network with an 18,000-site reach. Populated locations nationwide will see coverage improve from 96% to 98% when the project is complete. To fund the modernisation project CelcomDigi will reinvest 15% to 18% of total revenue in capex. The project is expected to be completed in three years' time.

Globe says it is the first communications service provider in the Philippines to deploy the end-to-end (E2E) network slicing function of standalone 5G. End-to-end network slicing divides the network into separate channels, each designed specifically for different types of applications or groups of users. 5G network slicing will allow Globe to adjust resources such as bandwidth, processing power, and network functions to meet the diverse demands of an increasingly connected world. The technology not only allows for the development and delivery of unique services and innovative applications but also accommodates customers’ growing data needs and ensures low-latency services. Now Globe, and other 5G SA operators, will need to meet the challenge of developing and monetising these capabilities, seen as a potential revenue stream at a time when other services, notably voice and text, are much less profitable than they once were.

The Philippines' third operator DITO Telecommunity stated ambitions to turn a profit in 2028, as it continues to invest in coverage expansion to fulfil regulatory coverage targets. The operator has a fourth annual technical audit by regulator the National Telecommunications Commission this month. To pass the audit, Dito needs to prove it deployed coverage to 80% of the population and delivered minimum download speeds of 55Mbps over 4G. DITO has a presence in 810 cities and municipalities in the Philippines with a subscriber base of 17 million since commercial launch in March 2021. The operator achieved 12 million subscribers in November 2022. DITO CME booked a net loss of PHP11.24 billion in 2022, growing from a loss of PHP9.67 billion in 2021 due to the expensive deployment of its operator unit.

Unity Digital Infrastructure, a key player in the Philippine tower market, signed sale-and-leaseback agreements with Smart-PLDT and Globe for the acquisition of 1,100 towers which will support efforts in improving the digital infrastructure space and connectivity in the country.

Unity has also partnered with Visayan Electric Company (VECO) to power up the first three-tenant tower sites in the country, located in Cebu. The three tenants are the local operators Globe Telecom as the anchor tenant, along with Smart Communications and DITO Telecommunity as co-location tenants.

Unity Digital Infrastructure is a joint venture between Aboitiz InfraCapital and leading global private markets firm Partners Group.

South Korea’s Ministry of Science and ICT (MSIT) has unveiled plans to allocate spectrum in the 700MHz and 28GHz bands, noting that the frequencies will be available to new operators as part of efforts to enhance competition in the country’s mobile sector, with the nation’s incumbent mobile operators are barred from bidding. The regulator will also open applications for the frequencies on a regional basis, should a nationwide operator not be found. In terms of pricing, the MSIT has set a KRW74.2 billion (USD58 million) minimum for the national concession, with regional pricing ranging from KRW1.8 billion to KRW33.7 billion, dependent on the region. The application process will open on 20 November 2023.

Telekom Austria Group’s majority shareholders are to approve the demerger and management of 12,900 of its towers in Austria, Bulgaria, Croatia, Serbia, Slovenia and Northern Macedonia under the EuroTeleSites towerco at an extraordinary general meeting on 1st August.

The move follows a multi-stage restructuring of the group’s passive infrastructure assets in the six countries which started with the spin-off of towers in Bulgaria, Croatia, Serbia, Slovenia and Northern Macedonia between 2012 and 2022 (going under the A1 Towers brand), followed by the Austrian sites being carved out last in 2023.

EuroTeleSites which will be based in Vienna will be listed on the Vienna Stock Exchange before the end of 2023. Telekom Austria Group’s sites in Belarus as well as a small number of unnamed sites are not in EuroTeleSites’ scope and no plans have been announced for these assets yet.

The Czech-Republic based PPF Group has begun talks with UAE-based Emirates Telecommunications Group (e&) to enter a partnership and explore opportunities for cooperation in Central and Eastern Europe (CEE) excluding the Czech Republic, PPF’s Communications Director has confirmed to Bulgarian media kapital.bg.

The potential cooperation would include a sale of at least a 25% stake in PPF’s MNO units Yettel in Bulgaria, Hungary and Serbia as well as the CETIN infrastructure units. Financial details around a potential deal are to be announced as early as end- August subject to the completion of a due diligence report.

Cellnex has secured a EUR 315mn loan from the European Investment Bank (EIB) to finance the development of new infrastructure related to 5G rollouts in urban and rural areas in Spain, Portugal, France, Italy and Poland.

In addition to building new telecoms infrastructure, the financing will be used towards improvements enabling infrastructure sharing by multiple MNOs, fibre rollout to connect towers to each operator’s network, distributed antenna systems (DAS) to increase base station capacity and the use of renewable energy and energy efficiency measures in selected base stations. Around half of the new sites will be installed in cohesion regions where per capita income is less than 75% of the EU average.

MNO Digi, wholly owned by 4iG’ s Antenna Hungaria has sold 2,500 towers, active and passive radio network assets, alongside licensed 1800MHz spectrum to local state-owned Pro-M for HUF68 bn (US$199mn). Pro-M was set up in 2005 to build and operate the government’s emergency services network. It plans to use the acquired infrastructure to provide broadband data transmission services to law enforcement agencies, the Hungarian Defence Forces, and the disaster management services. The deal also includes the costs of building the new core network for the tower infrastructure.

The acquisition will help accelerate the completion of the nation’s public protection & disaster relief network. The infrastructure will also enable Pro-M to expand its closed-chain segmented communication network services provided to gas, electricity, and water utilities.

Cellnex has bought a 30% stake in OnTower Poland from French minority shareholder Iliad for EUR 510mn increasing its majority stake from 70% to having full control. OnTower was set up by both companies in 2021 following Cellnex’s acquisition of 7,000 sites from Polish MNO Play, owned by Iliad, for EUR 800mn. Initially Cellnex held a 60% stake, subsequently increasing it to 70% and indicating it will look to acquire full control and then merge OnTower with Cellnex Poland in the future At present OnTower operates 8,500 sites in the country with plans to build 3,400 new sites by 2030. Cellnex’s total site count in Poland is 15,500 making it the biggest towerco in the country.

Broadcast towerco Emitel has signed a new Loan Facilities Agreement with a consortium of Polish and international banks securing PLN 1.57bn (EUR 354.46mn) of financing for seven years, the company has announced.

The Agreement includes a Senior Secured term loan, a Capex Facility, and a Revolving Credit Facility. The term loan tranches will be used to retire its 2020 loan facility, and the investment and revolving tranche will be applied to finance the company’s operational activities, investments, and acquisition plans. “Currently, the company has 667 high-facilities objects and intends to continue to develop the base of facilities in Poland, nor does it exclude further acquisitions”, Emitel has said.

In June 2023, Emitel acquired 65 towers from ATC Polska, the local subsidiary of ATC Europe.

Rural specialist towerco AMN has entered into a commercial agreement with Starlink, SpaceX’s constellation of satellites in low earth orbit, to connect mobile base stations with high-speed, low-latency broadband services to provide quick and reliable connectivity to remote and rural regions. AMN has been on an explosive growth path and now provides the infrastructure servicing over 10 million people in 4,000 communities across 14 countries in Africa. Their new deal with Starlink enables AMN to offer 3G and 4G services with increased bandwidth and data volumes while remaining commercially viable for MNOs. AMN plans to deploy Starlink terminals in Nigeria this year as part of a wider project to connect 700 additional rural communities before the end of 2023.

The Angolan government is in negotiations with an unnamed African investor for a proposed sale of a stake in struggling MNO Movicel, which could include management control. State-owned Angolan Telecom holds an 18% stake in Movicel and an additional 25% through the Instituto Nacional de Seguranca Social (INSS). An Expanso report shows that Movicel has been suffering serious operational issues including network equipment being turned off and massive debts to suppliers, as a result loosing over 2 million customers and half its workers over the last five years. With sale talks at an advanced stage, a new injection of capital and a fresh management team could help steer Movicel towards a brighter future and take on rival MNO Africell Angola who has been successfully rolling out its network after launching last year.

Ethiopia’s attempt to introduce a third operator to the market is making progress, with the Ethiopian Communications Authority (ECA) opening a Request for Qualifications (RFQ), inviting interested parties to bid for the license. The ECA commented that it wants to invite “world-class telecommunications operators to come forward and take part in this exciting opportunity to operate within Ethiopia’s rapidly growing economy” although this license has already failed to sell once. Potential bidders have until September 15^th to send their responses

The last winner of a telecom license bid in Ethiopia was the Safaricom-led consortium backed by Sumimoto Corporation, the British International Investment institution and Vodafone. However, a previous consortium headed by MTN and back by China’s Silk Road Fund failed to meet the governments expectations and the license went unawarded. While Ethiopia is a fast-growing economy with a large population, MNOs may have been put off by previous failed licensing attempts, as well as a more competitive market with Safaricom and Ethiotel already fighting for customers.

Senegal’s Regulation Authority for Telecommunications and Posts (ARTP) has awarded Sonatel (Orange Senegal) a 5G license, after the MNO bid US$59.1mn for the authorisation, outbidding rivals Free and Expresso who were not able to match the reserve price stablished by the ARTP. ARTP Director General Abdou Karim Sall said in a press conference the purpose of the call for tenders was to choose an operator that can deploy reliable 5G infrastructure as soon as possible to meet growing connectivity demand in Senegal.

“Following the examination of the submitted offers, the committee for the evaluation of technical and financial offers proposed to the Selection Committee to retain Sonatel, which was the only candidate to have fulfilled the conditions set by the regulations”

MTN and Airtel have been awarded 5G spectrum by the Uganda Communication Commission, with MTN winning frequencies in the 700MHz, 2.3GHz, 2.6GHz and E-Band ranges and Airtel in the 800MHz, 3.5GHz and E-band ranges. Both MNOs have upgraded their networks to be 5G-ready and are prepared for a quick commercial launch once the license becomes valid. Three MNOs were unsuccessful in winning any spectrum, with Uganda Telecom Limited (UTL), Lyca Mobile and Ala Technology. The process, based on MNOs 5-year investment plans, allocated 68% of the spectrum made available with some blocks left unawarded.

Ooredoo and Zain have announced a planned combination with TASC Towers to create a 30,000-strong towerco for the Middle East. Following the successful conclusion of the negotiation, the deal would need to pass the normal regulatory processes and would become the 14^th largest towerco in the world, the 8^th largest multi-country towerco, and the 7^th largest operator-owned towerco globally. The jointly-owned operator-backed but independently managed towerco structure makes the new towerco difficult to value but we have some valuation benchmarks we can turn to.

Following on the heels of Umniah, Orange Jordan has now turned on its own 5G network across several areas of Amman and Irbid, becoming the first country in MENA to have Orange’s 5G service. Orange Jordan brought in Ericsson’s direct competitor Nokia into the market to supply their 5G RAN equipment to replace Orange’s entire existing RAN network, allowing Orange to run the full spread of 2G-5G technologies simultaneously to achieve more efficient site solutions across their network. Jerome Henique, CEO of Orange MEA, highlighted the role of Orange Jordan’s 5G network in accelerating digital transformation and smart city development to support the digitisation of key industry sectors such as entertainment, health, manufacturing, education and transportation.

Back in August 2022 the Telecommunications Regulatory Commission (TRC) signed an agreement with Orange and Umniah to prepare for the introduction of 5G services, boosting competition and supporting the development of new communications infrastructure in response to growth in data demand. Orange brings a wealth of experience when deploying 5G in Jordan, having been a leader in the technology rollout in its European markets. Orange is also preparing for 5G in its other MENA markets of Morocco and Egypt, where it has run pilot tests and stand ready to deploy their 5G networks once spectrum has been allocated.