Leading Kenya’s connectivity: Insights from American Tower

With TowerXchange Meetup Africa moving to Nairobi, Kenya for 2024, we speak with industry-leading voices in the Kenyan tower industry to understand the market dynamics and key players in one of Africa’s fastest growing markets.

George Odenyo, CEO of ATC Kenya, spoke with TowerXchange to share his views on opportunities in Kenya’s tower market for organic growth, supporting operator technology rollout, managing power and sustainability, as well as exploring new services and revenue streams.

I am George Odenyo, the CEO of ATC Kenya. With a background entrenched in the telecommunications industry, I've navigated my path to leadership through diverse roles, culminating in my current position. My career started in 2001 as an intern at MTN Business Kenya during the nascent years of the technology sector boom when the country had just started developing its internet and mobile industry.

I worked for 15 years in MTN Kenya rising to various roles within the organisation. My first interaction with the towerco sector was in 2015 when I joined Eaton Towers Kenya as a Finance Director. I joined ATC Kenya in 2020, starting as a Chief Financial Officer (CFO). In January 2024, I was appointed as CEO of ATC Kenya.

The tower industry in Kenya is a dynamic and competitive sector that plays a crucial role in supporting the country's telecommunications infrastructure. With the increasing demand for mobile and internet services, the need for robust, resilient, and expansive tower networks has become even more paramount.

Like any other market, the tower ecosystem in Kenya started with the MNOs owning and operating their towers. One of them divested its towers to its subsidiary, which was later acquired by Eaton Towers in 2015. ATC then entered the market by acquiring another portfolio, followed by Eaton Tower’s in late 2019.

The acquisition brought an additional ~1,300 sites to our portfolio. Since then, we have worked with MNOs to help expand and deepen their networks. ATC Kenya’s portfolio has grown to almost ~4000 towers making our company the leading tower provider in this active tower market.

It’s a very vibrant space in the tower sector. We are seeing a lot of MNO demand for new sites which is primarily driven by customer needs and demand for voice and data. Despite the competition for new site rollout, Kenya offers enough tower activity for multiple towercos to carve out a space within the industry.

Towers are the building blocks of mobile network coverage as the model significantly reduces costs and streamlines management for the access, acquisition, and operation of telecom tower infrastructure, which are all significant hurdles that prevent existing and even new MNOs from expanding or entering the market.

Ultimately the winner is the consumer as we allow our MNO partners to focus on their customers by taking away their network challenges, who are presented with greater choice and better-quality services underpinned by a reliable telecommunications tower infrastructure backbone.

Macro tower solutions form the bulk of our support on 4G and 5G coverage with MNOs. Around ~20% of our sites countrywide already provide 5G support. Further to that, a significant component of the 4G/5G rollout in urban environments is done on rooftop and high vantage point sites on multi-story buildings. We are also deploying in-building solutions, in the form of indoor distributed antenna systems (IDAS) to improve network coverage in large buildings such as malls and skyscrapers.

Additionally, we are making it easier for MNOs to localise their network coverage in key strategic areas, developing connectivity solutions such as mini poles integrated with streetlights to offer lighting for local communities. These 4G smart solutions aren’t new to the market, with outdoor distributed antenna networks (ODAS) having been used in the past to cover high traffic areas, but we are seeing an uptake in demand for monopoles and urban street poles, with emerging demand for indoor DAS.

Kenya is also starting to embrace 5G technology. This will spur increased demand for smart urban coverage solutions, and we are committed to set a trend in the market to provide a 5G-ready network that will offer quick and seamless deployment for operators to roll out their 5G services.

The direction of new builds is mostly determined by the needs of MNOs. With the rapid expansion and adoption of 5G networks, we anticipate significant growth in build-to-suit (BTS) numbers in the next few years. Consequently, we are optimistic that the overall number of towers in the country may increase by at least 10-15% over the next 12-14 months to accommodate the capacity demands of this evolving technology landscape. We do have a strong pipeline of new builds, although we are also very selective in where we build sites to maximize commercial value of our invested capital.

In the future we would expect to see a shift in operator strategy as their network coverage matures away from site builds and towards collocations as they increase points of presence and densify to enhance 4G and 5G coverage.

Kenya’s grid power availability in the past has been very good, with up to 90 percent grid availability in some cases. However, recently we have started to see some grid decline, and while urban areas in Kenya have grid power stability, rural areas still struggle with poor or non-grid coverage. ATC Kenya employs a multi-pronged approach that capitalises on both technology and partnerships to address shortfalls.

Technologically we have made significant investments in rural areas, focusing on alternative energy sources to the grid, mostly solar power, and utilisation of the latest lithium-ion battery technology for storage. Currently 99% of our new builds employ solar arrays and 100% LIBs offering reliable power back-up. We also have a central power generation, storage and battery charging plants powered wholly by solar photovoltaics.

Our solar plant provides on-demand LIB charging solutions which are then deployed on sites on a plug-and-play model. In addition, we have employed AI technology monitoring tools on our sites that provide us with valuable data on how energy resources on our sites are utilised and how they can be optimised.

Additionally, we enjoy a very good relationship with the national grid provider. We have formalised agreements to enable speedy grid to site connectivity and metering. This is particularly helpful when grid extensions are required. Further, we are exploring opportunities to partner with independent power providers employing mini-grids/mini-hydro solutions.

Resiliency is a huge deliverable as our customers must ensure their networks remain constantly active. Solar and battery installations ensure sites use green and low-cost energy, if this fails, we can fall back to grid power, and only when this also goes down do we turn to backup diesel generators. With all these steps we can ensure uptime with up to 14 hours of back-up power.

The adoption of 5G technology with deployment of new base stations and upgrading existing ones to support higher data speeds and lower latency also translates to higher power consumption at the site. ATC is one of the leading providers of tower infrastructure globally, including in Kenya, and its commitment in supporting 5G adoption is seen through the deployment of green sites equipped with reliable power backup systems to match the ever-increasing power requirements.

Our green sites program is intended to accelerate greenhouse gas emissions reductions on behalf of ourselves as well as all our customers. These sites pair a higher count of solar arrays with capacities up to 16KW coupled with lithium-ion batteries that ensures power back-up availability up to 14 hours. Beyond this we are also testing a variety of alternative energy solutions including fuel cells as an alternative to diesel generators, as well as wind turbines.

The Kenya national electricity grid is predominantly green, with a mix of 92% generated from renewable power sources. Taking advantage of very good relationship with national grid provider, we have a program to accelerated grid connections on our new built sites. Improving our current energy utilisation mix to 67% supply from grid, 25% supply from solar generation and 8% from petroleum diesel.

To bridge this gap, we are actively exploring more alternative green energy sources to further reduce our environmental footprint such as:

• substituting 30% of our diesel fuel with biodiesel; 

• using fuel cells as an alternative to diesel generators; and 

• adding wind energy as an additional alternative power source. 

Currently we have a collaboration with the Kenya Forest Service (KFS) where we have helped plant 4,950 trees in Kenya, and we are working closely with the government agencies to help them meet their goal of planting 15 billion trees in 10 years.

Traditionally the Universal Service Fund (USF) was only tapped by MNOs in Kenya. A lot of inroads were made in 2020 where for the first time, the Government of Kenya extended utility of the universal service fund to fund sites constructed by towercos in unserved and underserved regions of Kenya.

Overall, remote tower sites are typically more expensive to establish. Particularly the costs to enable access to sites, tower build, connection to power and backhaul typically increase with remoteness. These areas also require taller structures, bigger foundations, complex excavations that often dissuade MNOs from making investments in these areas.

Some of the challenges that MNOs face while trying to provision networks in these areas are significant, security and lack of infrastructure in these areas remains one of significant concern and has made acquisitions, site maintenance and management a daunting exercise.

Through utilisation of the funds, ATC Kenya has built state of the art tower sites and these savings are also passed on to MNOs to make collocation of their equipment in these regions even more attractive and reasonable. Our power solutions are such that we have provisioned sites that heavily rely on renewables.

Our acquisition strategy has seen us work with government agencies to provision aerial surveys, and we have negotiated agreements to locate sites within the safe vicinity of military hardware to buffer security for our sites. ATC has since deployed 30 sites in these regions and has ~160 in the pipeline to enhance networks in these unserved and underserved regions.

We are very focused now on solutions that improve the efficiency of our existing portfolio, particularly in opportunities to expand our energy offering and platform extension initiatives that make our sites easily accessible and ready for MNOs. One possibility is to deliver last-mile fibre-to-the-tower to make our sites more attractive, boosting collocations and saving our customers cost and time as they won’t have to deploy this themselves.