Monthly News Roundup: October 2023

A total of AUD37.2 million (USD23 million) in funding has been awarded under the Australian government’s programme to reduce the number of mobile black spots, run by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts. The government grants, along with the industry co-investment of AUD28.8 million, will enable the construction of 41 new base stations in 42 target locations. The government said that four areas will benefit from coverage improvements through the projects that are already approved and funded through the regional connectivity and peri-urban mobile progammmes, or through commercial solutions. The grants will help deliver improved coverage and quality of service for regional and remote communities, motorists and tourists in the target areas. This comes in addition to the Australian government’s AUD1.1 billion Better Connectivity Plan, aimed at improving regional communications, and is a highly significant investment in regional communications in the country.

Australia’s government opened a consultation on planning rules to improve to mobile coverage in new housing developments. The proposed amendments to the Telecommunications in New Developments policy would place an expectation on developers to include mobile infrastructure in new developments, in a similar way as other services, such as water and electricity, are considered. Current planning policies in Australia focus on providing fixed voice and broadband services, but people in new communities report inadequate or no mobile coverage. Feedback on the proposed changes are requested by of 8 November 2023.

Indonesia’s Ministry of Communication and Informatics, also known locally as KemKominfo, revealed its plans to go ahead with auctioning 5G-suitable mobile spectrum in the 700MHz and 26GHz bands to improve the nation’s 5G internet speed. Having carried out a public consultation on the use of these radio frequency bands, the ministry aims to auction off bands in the 703MHz-748MHz range paired with 758MHz-803MHz, and 26GHz spectrum in the 24.25GHz-25.85GHz band to mobile network operators in the country in the near future.

India’s Supreme Court overturned the Delhi High Court’s 2013 ruling that mobile network operator licence fees from 1999 onwards should be treated as capital expenditure and not as revenue expenditure. This reversal is significant and might result in a potential financial blow to India’s mobile industry. The reason for this is that the revenue expenditure is deductible when calculating income tax whereas CAPEX is not, therefore the ruling could require telcos Bharti Airtel, Vodafone Idea (Vi) and Reliance Jio Infocomm (Jio) to pay more than two decades of back taxes. The extent and impact of the tax liabilities is not yet known, with the previous losses expected to partially offset the backdated fees. The Supreme Court decision can result in an additional burden of around INR80 billion (USD960 million) for the nation’s top providers in the 2023-24 financial year.

India’s Department of Telecommunications scrapped previous proposals to add new frequency bands to the country’s next multi-band 5G mobile spectrum auction scheduled for January 2024. The proposals to keep the base prices and conditions as the previous 5G auction concluded in August 2022, have similarly not been approved. The telecom department previously pushed for new bands to be offered via the auction including 37GHz millimetre wave frequencies as well as the 3.7GHz-4.2GHz band, the 1427MHz-1518MHz band and the 470MHz-582MHz band. Unallocated frequencies in bands including 700MHz, 800MHz, 1800MHz, 2100MHz, 3.5GHz and 26GHz are earmarked for sale in January with an approximate total value of INR2.65 trillion (USD31.83 billion). The Telecom Regulatory Authority of India (TRAI) has declined to provide base bidding prices for any new frequency bands. India’s multi-band 5G spectrum auction in 2022 concluded with Reliance Jio Infocomm (Jio), Bharti Airtel, Vodafone Idea (Vi) and Adani Data Networks spending a total of INR1.5 trillion on frequencies in the 700MHz, 800MHz, 1800MHz, 2100MHz, 3.5GHz and 26GHz bands. The next auction is scheduled near to the expiration dates of some of the Airtel and Vi licences.

The sale of American Tower’s Indian business may be drawing near as price differences between what ATC are willing to accept and others are willing to offer narrows. In June it was reported that American Tower pegged the enterprise valuation of its Indian arm at around US$4bn billion, while I Squared Capital and Stonepeak were expected to bid at $1.8 –$2.2 billion EV. On American Tower’s latest earnings call ATC’s CFO Rod Smith said “are writing the India business down about $322 million and sets the book value in around $2.2 billion or so.”

Orange’s Q3 2023 financial results revealed that the MENA region posted a 12% increase in revenues as 10 markets recorded double-digit growth, compared to 3.8% at group level. Earlier this year, Orange announced in their Lead the Future strategic plan a focus on developing the MNOs MEA markets, particularly on expanding network coverage to support increasing adoption of mobile and data usage, especially mobile money. The results showed an increase in MEA of 17.8% for mobile data, 17% for fixed broadband and 28.2% for mobile money, a massive increase especially compared with a rather flat 2.3% growth in Europe including a slight 0.5% dip in its home market France. Group CEO Christel Heydemann commented that “Africa and the Middle East continue their excellent performance driving the Group’s growth, with revenues increasing by over 12% and ten countries recording double digit growth”

Egypt's telecoms regulatory authority (NTRA) is in discussions to issue 5G licenses, with expectation these will be available as early as December at a minimum of US$500mn, although this remains unconfirmed. All four MNOs in the market (Orange, Vodafone, Etisalat and Telecom Egypt) are expected to bid, but have asked the NTRA to permit a 30% increase in service prices to combat shrinking profit margins due to inflation.

However, some sources have implied that the offering date may be pushed back to early 2024 to give MNOs the time to secure the necessary funding. Egypt already suffers from a history of underinvestment in telecoms infrastructure, and the regulatory constraints that limited towerco activity seem to be loosening up. 5G rollout will further necessitate network densification and structural upgrades for more tower loading, helping to further cement the importance of the towerco model in the market.

Pakistan is gearing up for the introduction of 5G services by August 2024. The country’s Ministry of Information Technology and Telecommunication has developed and submitted to the federal cabinet a plan for the launch of 5G services, which includes the hiring of an international consultant to advise on the design of an auction, as well as the creation of an inter-ministerial advisory committee to oversee the development of 5G networks. The ministry also proposes to reduce costs associated with infrastructure deployment and discussions are ongoing regarding reforms to incentivise participation in the spectrum sale.

Norwegian multi-national MNO Telenor has been looking for a buyer for its Pakistan business unit, of which it hopes to raise as much as US$1bn for and is currently looking at multiple offers on the table, according to their Group CEO. The decision to exit comes as Pakistan’s telecoms market, despite great macro prospects, continues to suffer from low ARPUs, a highly competitive market and economic challenges leaving the unit with a US$244mn impairment last year.

It’s not clear who all the bidders are, but one likely contender is PTCL, a joint-venture between Ufone and UAE-based MNO e&, who recently submitted a binding offer for a takeover. While no other bidders have been made public, stc Group has shown prior interest in entering the market and TAWAL already has a small but growing presence in the country. There is a possibility that a sale of at least some of the roughly 7,500 towers owned by Telenor could be part of the transaction.

Spanish MNOs Orange Espana and MÁSMÓVIL have pre-selected Digi Spain, owned by Romania-based Digi Communications, to buy assets they have planned to part with in order to alleviate EU competition concerns following the two MNOs earlier announcement to merge their businesses.

According to Reuters, Orange and MÁSMÓVIL are currently drawing up a portfolio of remedies to relieve EC worries over the potential impact of the merger on competition on the market. The package is not finalised but in addition to infrastructure, it could include spectrum, a consumer unit and a brand.

Digi which already has presence in Spain operating as an MVNO with 5.7mn customers, has been vocal about its wish to become the country’s fourth MNO and invest up to EUR2bn should the merger be allowed.

Earlier this month, Digi announced that it has completed the first investment under a joint project with abrdn plc to roll-out of fibre network (FTTH) in the country. The network aims to cover up to 2.5mn homes in the south.

Polish Regulator (Urzad Komunikacji Elektronicznej, UKE) has completed the 5G midband auction after three days and 17 rounds of bidding. Four licenses were awarded to all four country’s MNOs with the amount paid totalling PLN 1.921bn (USD$454mn).

The completion of the auction marks the country’s assigning of a 5G pioneer band. Prior to it taking place, Poland was the last EU member state not yet assigned any of the 5G pioneer bands.

UKE has said it will focus on developing the terms for the tender of the 700 MHz band.

Cornerstone, Cellnex UK, MBNL and Wireless Infrastructure Group have launched the Mobile Infrastructure Forum (MIF) aimed at improving connectivity and enabling efficient deployment of infrastructure.

The four big operators of macro towers across the UK have said the forum is a collaborative effort and its goal is to enhance mobile infrastructure. It will work closely with the country’s MNOs, foster relationships between landowners and infrastructure providers and share with government the combined view of MIF members to inform policy and regulatory activity.

“The MIF forum will give us the platform alongside its other members to inform decision-makers, communicate the benefits of enhanced wireless connectivity and cultivate better relationships between infrastructure providers and landowners to support this vision”, Alastair Davidson, Director of Strategy and Regulation at Wireless Infrastructure Group and a MIF member has said.

Argentina staged its long-awaited 5G spectrum auction on 24 October, raising US$875mn for its cash strapped government and allowing the country’s MNOs to begin 5G rollout in earnest. Claro Argentina, Telecom Argentina and Telefonica Argentina each secured a 20 year licence. Winning bidders have until October 2030 to cover all towers with at least 30,000 inhabitants in a five-stage rollout schedule.

ANATEL revealed its lates count of base stations in the South American power house. Brazil has 89,731 mobile base stations (including 17,271 5G base stations). On 70,316 that calculates to a 1.28x tenancy ration, with at most 17,271 lease amendments to accommodate additional 5G equipment on existing towers.

Millicom has come to an agreement with EPM to capitalise Tigo Colombia. Each partner will contribute COP300 billion (US$71mn) without any change to shareholding in the mobile operator. The terms for a future full acquisition of the mobile operator have also been amended. The resolution of Tigo Colombia’s capital structure will unlock new site development and upgrades.

Canadian RAN provider and one of Africa’s fast-growing netco’s NuRAN has secured a license to operate in Cameroon as part of wider ambitions to deploy 10,000 sites on the continent. The license will allow NuRAN to deliver its passive and active network-as-a-service (NaaS) for MNOs in rural areas and start fulfilling its 4,642 sites under contract in 7 African countries; Cameroon, the DRC, Sudan, South Sudan, Namibia, the Ivory Coast and Madagascar. IHS Towers is currently the only operating towerco in Cameroon, but has stated that its interest is not in rural sites as the economics are extremely challenging and capital allocation is being prioritised to those with better commercial prospects in more urban environments.

Vodafone Ghana have taken control of 653 sites which had previously been managed by American Tower. Eaton Towers originally took over Vodafone’s sites on a MLL (Managed with licence to lease) arrangement in 2010. Vodafone Ghana has confirmed to TowerXchange that the sites have now reverted to their original owners. It is not clear whether Vodafone Ghana will seek to sell the returned towers or manage them internally.

Kenya: Government backs out of Telkom acquisition

Kenya’s government has decided to reverse its decision to acquire a 60% majority holding in Telkom Kenya from Helios Investment Partners agreed in October 2022, a deal made by the outgoing government who saw it essential to retain control over the MNO. After an evaluation process by the National Treasury, it was recommended that the UAE-based Infrastructure Corporation of Africa (ICA) should acquire the majority stake including a capital injection to improve the company’s capabilities. Telkom Kenya has been struggling financially with lack of revenue and funding and was recently disconnected for American Tower’s network for failing to pay tenancy fees. Fresh investment from outside the debt-burdened government sector will be key to resolving the operator’s challenges.

Madagascar: AMN’s first sites go live

Rural Network-as-a-Service (NaaS) provider AMN announced its first sites deployed in Madagascar have gone live, marking the netco’s 16^th country to provide commercial services in. AMN signed an agreement with Orange Madagascar back in March to expand rural coverage for the MNO with the deployment of 500 rural base stations on a passive and active ownership, revenue share model.

Namibia: CRAN issues 5G licenses

Namibia’s Communications Regulatory Authority (CRAN) has issued thee 5G licenses following a spectrum auction in the 700MHz and 800MHz bands at the beginning of October. The auction raised US$1.47mn with MNOs MTC and Telecom Namibia as well as ISP Loc8 Mobile all acquiring spectrum licenses valid for 10 years and are obligated to provide 4G and 5G services with a download speed of at least 20Mbps. It also included the requirement to bring 4G coverage to 80% in six regions as part of the regulators plan of improving universal coverage.

Senegal: AXIAN Telecom raises take in Free Senegal to 80%

Madagascan-based MNO AXIAN Telecom, part of the AXIAN Group, has closed its acquisition for an additional 40% of local Senegalese MNO Free, taking its shareholding up to a majority 80%. Free Senegal is the 2^nd largest MNO in the market with a share of 25% behind Sonatel (Orange). AXIAN Telecom has been driving a strategy of pan-African expansion with operations in the Comoros, Madagascar, Mayotte, Reunion, Senegal, Tanzania and Togo and is also in discussions with MTN over a potential acquisition of the MNOs operations in Guinea, Guinea-Bissau and Liberia.

AXIAN Telecom’s subsidiary towerco TowerCo of Africa has similarly been through recent expansion from Madagascar into Uganda and Tanzania, and most recently the DRC. It is speculated that the towerco will continue to expand through carve-outs to manage its parent company’s network infrastructure as the group expands.

Zambia: Starlink launches satellite internet

Starlink’s pan-African expansion sees the LEO provider arrive next in Zambia where the Space-X branch has launched commercial services to deliver rural internet services. This comes after Starlink secured a license in Zambia in June after a successful pilot. Zambia’s government has been pushing for rural connectivity to enhance network coverage, and local towerco Infratel has been struggling to create a working commercial model for rural services, something many African towercos have been facing. Starlink will help alleviate MNO service coverage requirements in the most rural zones, allowing for terrestrial networks to focus on areas of higher density.