Monthly News Roundup: November/December 2023

TASC Towers, Kuwaiti-based Zain Group and Qatar-based Ooredoo have announced the signing of an agreement to create the largest tower company in MENA. The cash and share deal covers just under 30,000 towers across Qatar, Algeria, Tunisia, Kuwait, Jordan and Iraq, with a current estimated value of US$2.2bn. Ooredoo and Zain will retain equal shareholdings of 49.3% through an asset and cash equalization process. TASC Towers will retain the remaining 1.4% through Digital Infrastructure Assets LLP and be responsible for delivering operational management. Read more here.

Zain KSA, who recently finalised the sale of its 8,069 tower portfolio in Saudi Arabia to sovereign wealth fund PIF under the holding company LATIS (GLIC), has reported its highest quarterly revenues exceeding SAR 2.5bn. This is a 10% increase compared to Q3 last year, as well as a 234% growth in net profit. Business growth in new services and solutions such as cloud computing, IoT and AI also helped drive up profits to record levels.

In the latest edition of Ericsson’s Mobility Report, the total number of 5G subscriptions in the MENA region is forecasted to reach 850 million by 2029, up from 740 million in 2023. 4G subscriptions will account for 54% while 5G will represent around 40%. The region is also set for huge mobile data traffic growth, with a compound annual growth rate (CAGR) of 23% over the same period, primarily driven by 4G. The increase in over 100 million 5G subscribers in the next 5 years will put an enormous burden on the capacity and energy consumption of existing networks and will require significant investment in network expansion, densification and efficiency.

Vodacom has reported a 35.5% increase in H1 revenues to EURO3.64bn driven primarily by the groups acquisition of Vodafone Egypt from parent company who handed over its 55% stake back in December. Despite tough macroeconomic conditions, Vodafone Egypt generated R14.3bn, 24.1% of the group’s total, driven by strong growth in data revenues, customer engagement and content integration. Vodafone Egypt ended H1 with 47mn subscribers, a 5.5% increase. This is in opposition to the group's overall decline of 4.2% in H1 earnings, largely due to high start-up costs in Ethiopia and interest rate hikes.

The Iranian government is preparing to award 5G spectrum in the 3.7GHz - 3.8GHz bands to support growing demands for high-speed internet, helping MNOs boost services under the current 4G systems. 3G and 4G coverage is available to 93% of the population while 5G is expected to reach 10% by 2025. The number of 5G base stations is expected to rise from 800 currently to 1,200 by March 2024 and up to 4,000 by March 2025.

TowerXchange is aware of Saudi Arabian MNO Mobily issuing a request for proposal seeking advisors for a tower sale. Further details are unknown but were highly anticipated, as Mobily remains the final MNO in the Kingdom to retain its tower infrastructure. STC carved out its towers into a new entity TAWAL in 2019, while Zain KSA finally sold its portfolio to sovereign wealth fund PIF, that has since issued a request for the 51% of TAWAL that STC owns in a likely upcoming towerco merger. This final tower sale will finally consolidate the market under a single towerco entity.

Infrastructure investor Actis has sought up to US$75mn from the International Finance Corporation (IFC) to support its bid to acquire the assets of Telekom Srbija, the IFS has announced.

Telekom Srbija which is 58% owned by the Republic of Serbia operates assets in Serbia, Bosnia and Herzegovina and Montenegro. The MNO will carve out the 1,827 assets into separate towercos in each country prior to the sale. At present 995 of the assets are in Serbia, 725 are in Bosnia and Herzegovina and 107 are in Montenegro.

Pending regulatory clearance, the IFC and other private institutional investors will invest equity in an investment vehicle that will be established and managed by Actis and will own 100% of the towercos’ shares. Telekom Srbija and its subsidiaries would be the towercos’ anchor tenants and a build-to-suit programme for additional sites would be rolled out.

Actis has been selected as the preferred bidder after multiple rounds of the sale process that Telekom Srbija started in late 2022.

Cellnex has sold its private networks unit which largely includes Edzcom, Cellnex’s Finnish subsidiary, to Boldyn for an undisclosed amount. The transaction is expected to complete in Q1 2024.

Cellnex bought Edzcom for an undisclosed amount in mid-2020 and the company at the time employed 17 people.

Cellnex has grown through acquisitions since listing in 2015, but under its new CEO, the company has focused on reducing its leverage ratio below six times its core earnings in 2024 within its strategy to improve its credit rating and has started to sell assets.

Following the same strategy, in September, Cellnex sold a 49% stake in its Nordics operations to Stonepeak for EUR730mn.

Cordiant Digital Infrastructure has bought Belgian broadcast towerco Norkring België NV from its current shareholders Telenor Communication II AS and Participatiemaatschappij Vlaanderen NV. The towerco operates 25 sites, eight of which are freehold and 17 leased, and is being acquired for an enterprise value of EUR5.25mn.

In addition to providing radio and TV broadcasting services, Norkring offers colocation and site-hosting to broadcasters, niche communications operators and mobile network operators.

The youngest German MNO 1&1 has announced the activation of its own mobile network and the start to offer services to customers on it from 8 December. Initially, customers will have access to Telefonica’s network where there is no dedicated coverage during the roll-out phase of the mobile network. This is part of a national roaming agreement with Telefonica that covers 2G, 4G and 5G.

In August 2023 1&1 announced a national roaming agreement with Vodafone’s 5G network in areas that are not yet covered by its own network starting from July 2024 ousting current network partner Telefonica and reducing gradually services from Telefonica. According to Bloomberg, Telefonica Deutschland generates as much as 40% of its free cash flow from the 1&1 colocation deal.

1&1 missed coverage targets claiming Vantage Towers has failed to activate 1&1 sites on its infrastructure, leaving the MNO with just five operational 5G sites at end-2022, behind the 1,000 it was required to have under the terms of its spectrum licenses. The MNO’s claims are currently investigated by the German Federal Cartel Office.

The telecoms and IT group 4iG has started a large-scale comprehensive transformation programme across the business to eliminate duplication and fully exploit cost synergies, the company has announced. 4iG expects to complete it by the end of 2025 and estimates it will generate HUF400bn (US$1.15bn) of additional enterprise value as a result.

The group that owns MNO Digi, has already carved out and sold 2,500 towers and active equipment alongside licensed 1800MHz spectrum to state-owned emergency network manager Pro-M for HUF68 bn (US$199mn) in line with its strategy for infrastructure separation.

Through its subsidiary Antenna Hungaria, the group is also exploring opportunities for consolidating, carving out and monetising fixed infrastructure in Hungary and passive mobile infrastructure in Albania and Montenegro.

Greek OTE, a subsidiary of Deutsche Telekom, which owns Telekom Romania is said to be nearing a sale of the MNO.

OTE has confirmed to the Hellenic Capital Market Commission that it is in talks to sell Telekom to Romanian broadcaster Clever Media Network (CMN). According to Romanian media, this is the third attempt by its owner to sell the MNO. The deal is analysed by Romania’s Supreme Council of National Defence which is rumoured to have blocked the previous two attempts for sale.

There have been speculations Deutsche Telekom has been looking for buyers of its MNO unit in Romania and exit the market since November 2022, if not earlier. Telekom Romania was the country’s only MNO that didn’t take part in the multiband 5G spectrum auction that was held at the time.

Following its exit from central America in 2018, Telefonica has had the option of exiting its Spanish-language markets completely. Speaking during the group’s Capital Markets Day presentation, Laura Abasolo, Group Chief Financial and Control Officer and Head of Telefonica Hispam, noted: ‘We keep our options open to reduce exposure further, either through potential divestments that could faster deleverage, but also in-market consolidation that could lead to a so-much-needed market rationality and synergies, therefore fostering our free cash flow.’ The remarks were reported by Telco Titans and Telegeography’s Commsupdate. Telefonica Hispam has operations in Argentina, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela.

The consortium of BlackRock and Grain Management planning to buy a 20% stake in Phoenix Tower International took a step forward in November after being given approval by Brazil’s mergers regulator. According to people with knowledge of the matter, the deal is valued at US$1.3 billion, giving the towerco a total value of US$6.5 billion. TowerXchange is unaware of any timeline for final closure of the deal.

Following the surprise election of Milei in Argentina there have been rumours that ARSAT is up for sale. However, Slim-backed America Movil has denied reports it is in active talks. The libertarian president has few allies in Argentina’s Congress but ran on a campaign of economic liberalisation and dollarisation which may make the country more attractive to towerco investment. Meanwhile, Personal has announced its switched on 5G Standalone services on dozens of sites one month after successfully bidding on 3.5GHz spectrum in the country’s 5G auction.

Winity Telecom was the top buyer of 5G spectrum in Brazil’s spectrum auction and planned to monetise the spectrum in innovative ways, including creating a wholesale network and building 5,000 towers by 2029. It has reportedly asked the regulator Anatel for a postponement of its licence fee and rollout obligations. Meanwhile fixed wireless and mobile operators Brisanet, Veloso NET and Algar Telecom are reportedly expanding their 5G presence into new municipalities.

Phoenix Tower consolidates its position in three markets and create new island homes for the telecom tower industry. The acquisition of 1,300 sites from Liberty Latin America covers Panama, Jamaica, The Bahamas, Puerto Rico, Barbados and the British Virgin Islands. As with other sale and leasebacks signed in the last few years, the transaction also includes a built-to-suit element. LLA has promised 500 new sites will sent to PTI over the next five years. As part of the deal the total proceeds will increase to US$407mn with net proceeds to be used to reduce debt and further invest in the LLA’s businesses. Read more here.

Claro Colombia; Partners Telecom Colombia (WOM); Union Temporal Colombia Movil-Telefonica (a network-sharing JV between Tigo and Movistar); and Sociedad Futura Telecall Colombia. Telegeography reports that Sociedad Futura Telecall Colombia is an affiliate of Rio de Janeiro-based B2B operator Telexperts Telecomunicacoes (Telecall). The auction will commence on 20 December.

After MTNs exit from Afghanistan, which the group plans to complete by December, the MNO is in discussions regarding a potential exist of its operations in Guinnea-Bissau, Guinea-Conakry and Liberia. MTN has faces major challenges across West and Central Africa bracing inflation and currency devaluation. MTN’s operations in these 3 countries account for just 1.6% of the groups revenue, and will allow MTN to shore up investments in their more core markets.

Vodacom DRC is currently testing 5G technology under regulatory supervision with the expectation of delivering the service to enterprise, government and IoT use-cases. However, 4G remains the priority with commitments of major deployments and capex expenditure to building out their 5G network. This is significantly impacted by the provision of on-site power as most sites remain reliant on diesel generators, with high theft rates of solar PV and batteries causing major setbacks to the rollout program. Vodacom’s smartphone penetration sits at just 30-35%, peaking at around 50% in the capital of Kinshasa.

Canadian network-as-a-service provider NuRAN, having recently acquired an operating license in Cameroon, is now in the process of acquiring a similar license in the DRC. In addition to providing a passive + active Network-as-a-Service, the new license will also include satellite telecom services (VSAT) as well. Originally a single-towerco market with only Helios Towers, the huge connectivity gap in one of Africa’s largest countries has attracted a host of new towerco players including Eastcastle Infrastructure, TowerCo of Africa and AMN.

Ethiopia’s tender for a new MNO launched back in July has failed to attract any bids and any further auctions are likely to be put on hold as political instability once again flares up only a year after a civil war between the government and Tigray people.

One of the known bidders Orange has withdrawn from the process to buy a 45% stake in Ethio Telecom, which the government was hoping to sell to privatize the state-owned entity. Orange explained it’s deicison was based on macro conditions that would have prevented the rapid deployment of their strategy. The MNO had first shown interest in acquiring Ethiotel 2 years ago, which the government had postponed due to economic conditions.

After the news that MTN Nigeria decided to not renew their lease with IHS Towers on 2,500 sites, the MNO has entered into a new agreement with rival towerco American Tower Corporation Africa. From Q2 2024 ATC Africa will facilitate new tenancies for MTN on their 8,000 towers in the country as well as provide build-to-suit in line with their green site specifications.

MTN Nigeria’s CEO Karl Toriola commented “Through this partnership with ATC Africa, we are setting the stage for a new era of connectivity in Nigeria, one that not only meets the growing demands of our customers but also aligns with our commitment to sustainability and environmental responsibility.”

South African MNO Telkom has asked ICASA, South Africa’s telecom regulator, to delay its upcoming spectrum auction due to a lack of funds to participate. Last year, several frequencies were sold off for 4G and 5G services resulting in MTN and Vodacom obtaining significant allocations. ICASA had origianlly pland to hold the next spectrum auction before March 31^st 2024, but Telkom has requested a delay to 2025 with the impact of power cuts and a challenging macroeconomic environment limiting their resources to acquire spectrum at this time. Telkom has already turned off its 2G network and state 82% of its customers are on 4G.

South African MNO and 3^rd largest market player Telkom is in exclusive negotiations with a preferred bidder on the possible sale of its towerco business unit Swiftnet. The preferred bidders is understood to be a consortium of equity investors including a Black Economic Empowerment partner led by a reputable private equity firm. Telkom has been struggling to keep up with its larger counterparts MTN and Vodacom, missing out on recent spectrum auctions due to lack of available funds. After MTN sold its tower portfolio to IHS last year, and Vodacom recently announced the launch of its carve-out Mast Services, a tower sale can unlock much needed capital and help reorganise the business by consolidating core assets.

Titled “An Infrastructure-Based Approach to Advance Digital Equity in South-East Asia”, the whitepaper identifies connectivity challenges from an infrastructure provider’s perspective in three key economies, Malaysia, Indonesia, and the Philippines, and sets forth comprehensive policy changes to address those gaps. Read more here.

Malaysia’s Persatuan Penyedia Infrastruktur Telekomunikasi Malaysia (PPIT), an association of telecommunications infrastructure providers in the country, and Indonesia’s Asosasi Pengembang Infrastruktur dan Menara Telekomunikasi (ASPIMTEL), an association that involves companies engaged in the field of infrastructure and tower development in Indonesia, have partnered to sign a Memorandum of Understanding (MoU) for cross-country knowledge sharing and mutual discussion. With the signing, PPIT and ASPIMTEL solidify their respective countries’ commitments to sharing innovative knowledge and best practices, marking a new age of cooperation and partnership between Malaysia and Indonesia to improve digital inclusion within the region.

Australia: Regulator reveals spectrum allocation

Four companies won spectrum in the Australian Communications and Media Authority’s 3.4GHz/3.7GHz bands spectrum allocation process, the regulator has confirmed. With a total of 588 spectrum lots having been made available as part of this sale process, 574 of these were allocated to bidders, raising a total of AUD722 million (USD472 million) for the state. Telstra emerged as the biggest spender, having agreed to pay a total of AUD546 million for 326 spectrum lots across the 3.4GHz spectrum and 3.7GHz bands, while TPG Telecom – which bid via wholly owned subsidiary Mobile JV – spent AUD128 million on 44 lots of 3.7GHz spectrum. Rounding out the winning bidders were NBN Co, which bid AUD34 million for 200 lots in the 3.4GHz band, and Optus, which spent AUD14 million on four lots of 3.7GHz spectrum. The 3.4GHz concessions will expire in December 2030 and the 3.7GHz licences in January 2044.

Summit Digitel has created a new subsidiary with Brookfield called Roam Digitel to focus on build-to-suit in the busy Indian market. The company will supplement Summit Digitel, Brookfield’s Indian towerco, and will be dedicated to tower acquisition and construction. The majority of Summit Digitel’s 174,000 towers were purchased from Reliance Jio owned infrastructure companies whereas Roam Digitel will work with every operator.

Indonesian telco Indosat Ooredoo Hutchison (IOH) is working to develop a 4G LTE network in the country’s future capital, Nusantara, which is currently under construction on the island of Borneo. The operator is working closely with the authorities to ensure that there is world-class digital infrastructure and is seeking to capitalise on the growth opportunities in Indonesia’s underserved rural areas. The company has already invested around USD10 million to deploy around 40 new base transceiver stations in Nusantara on top of the 30 4G sites it already operates in the area. IOH has launched 5G in eight cities across Indonesia, but still believes that 4G LTE is key to its strategy to close the digital divide in the country and will be focusing on expanding and strengthening our 4G network going forward. Each year, the operator invests approximately USD800 million into its CAPEX programmes. From 2023 onward, around 60% of that is reportedly being spent in rural Indonesia.

Indonesian mobile network operators, working with the Ministry of Communication and Informatics, have established a task force charged with coming up with new incentives to accelerate the implementation of 5G technology in Indonesia. The task force is particularly interested in seeking a new formula ‘to balance technical, technological and financial issues’. Specifically, the financial red tape concerns the Non-Tax State Revenue (PNBP) derived from the 5G frequencies that will be allocated to MNOs. Under the current framework, telecoms operators include frequency-related PNBP payments as regulatory charges, which are currently equivalent to 11%-12% of annual revenue (or 14%-15% if there are additional managed frequencies). However, the MNOs argue that in order to retain their profitability levels that figure needs to be capped at <10%.

Majority government-owned telecoms operator Telkom Indonesia has signed a memorandum of understanding with South Korea’s KT Corp to build the network infrastructure for Indonesia’s new capital Nusantara. KT is looking to become the backbone of the new capital project to transform Nusantara into a smart city, by offering its expertise in the areas of cyber security and IT, such as quantum cryptography, to minimise or eradicate hacking. It is understood the two telcos will jointly create new data centres and expand business into transportation, energy and AI.

Telecommunications company One New Zealand (formerly Vodafone NZ) announced an agreement to acquire Dense Air’s New Zealand business, including the mid-band spectrum it holds. If approved by regulators, the deal would give One NZ management of 2×35MHz of unused 2600MHz spectrum which could be deployed to improve speed and capacity on its 4G and 5G mobile and fixed wireless access networks. The operator did not disclose financial details of the transaction, which remains subject to clearance by competition regulator the Commerce Commission and other customary closing conditions. This move is a part of One NZ’s continuous focus on network improvement, which has seen a significant investment in over 500 4G and 5G site upgrades and new builds in the past 18 months.

EDOTCO Group will be working with the Telecom Infra Project (TIP) to empower communities across the region through improved connectivity. This initiative will start in Malaysia as part of a series of pilots before making the 5G connection accessible to a broader part of the region in the next three years. In this initiative, EDOTCO will deploy six pilot in-building solutions with a Neutral Host model and shareable 4G and 5G small cells in identified iconic buildings in Malaysia, such as the Kuala Lumpur International Airport, KL Sentral and Merdeka 118. This effort will provide better indoor coverage for users – in tandem with the increasing requirement to generate more traffic in the next decade. With the deployment of this solution, mobile users will be able to enjoy high speed, low latency and metaverse-ready internet experience.

Mobile network operator NOW Telecom signed a memorandum of understanding with US-based AST SpaceMobile to provide satellite mobile broadband in urban and remote regions of the Philippines. to establish a bigger footprint across the country. This initiative focuses on providing comprehensive communication services, including voice, video, data, and internet connectivity, to remote regions with limited or non-existent infrastructure, to enable very Filipino to connect their mobile phone from anywhere nationwide through AST satellites. The US company owns a string of Low Earth Orbit (LEO) satellites to provide communications and internet connectivity in isolated areas where traditional land-based cell towers are difficult to build.

South Korea’s Ministry of Science and Information and Communication Technologies confirmed it is now accepting applications for 5G-suitable spectrum in the 28GHz (26.5GHz-27.3GHz) band. However, frequencies are only being offered to new operators as part of measures aimed at enhancing competition in the country’s mobile sector. As such, the nation’s incumbent MNOs– SK Telecom, KT Corp and LG Uplus – are barred from bidding for spectrum. In terms of pricing, the regulator has set a KRW74.2 billion (USD57 million) minimum for a national concession, while should the authorities fail to sell a nationwide licence, the spectrum will be offered on a regional basis, at prices ranging from KRW1.8 billion to KRW33.7 billion, dependent on the region. Applications for the spectrum have been requested by a deadline of 19 December 2023.

 

Vietnam’s National Assembly has passed amendments to the Law on Telecommunications 2009, with the aim of updating and modernising the existing legal framework. According to the Ministry of Information and Communication, the new law will support the implementation of Vietnam’s policies, fulfil international commitments and promote national digital transformation, while taking into account the increasing convergence between telecoms and IT development. It will establish a suitable legal framework that aligns with the new requirements and addresses obstacles encountered during the state’s implementation and management, while developing telecoms infrastructure to lay the foundation for the development of the digital economy and digital society. The amendment aims to address institutional issues, policy gaps, and inadequacies in the provisions of the 2009 Law on Telecommunications and other related legal regulations, which have been hindering the development process.