Monthly News Roundup: February 2023

The NTRA has accepted Telecom Egypt’s offer to obtain 5MHz of FDD spectrum in the 1800MHz band for US$125mn. Telecom Egypt hopes to use this latest spectrum purchase to support increased traffic as a result of a growing customer base, as well as increasing network coverage around the country. In the longer-term Telecom Egypt hopes that this investment will accelerate the MNO’s transition from telecom provider to leading ICT provider. Telecom Egypt last received spectrum back in 2020 when the NTRA accepted an offer for a 20MHz block of spectrum in the 2600MHz band for US$305mn.

Etisalat Egypt has signed a US$132.4mn financing agreement with Commercial International Bank to support further infrastructure expansion and push digital services. Not only will this support the MNOs data usage demands but support the country’s Digital Egypt project to promote digital transformation broadly aligned with Egypt’s Vision 2030 economic ambitions. Etisalat Egypt’s parent company e& recognises the Egyptian market as having considerable room for healthy economic growth given the country's young and growing population gaining increasing access to mobile data.

Pakistan’s national MNO PTCL is preparing a non-binding offer to Telenor for their Pakistan unit for US$800mn to US$1.2bn after the board voted in favour of the acquisition, to potentially form the 2nd largest MNO in the market by connections. PTCL’s parent company e& has committed to guarantee loans to finance the deal in US$ as Pakistan’s currency continues to decline amidst a liquidity crunch. Telenor operates a tower portfolio of around 7,500 sites which would be included in the transaction. As market leader Jazz prepares to sell their tower unit Deodar, a potential sale of Telenor’s 7,500 towers promises to rapidly accelerate towerco penetration in the market.

Saudi Telecom Company (stc) has signed an agreement with US-based Omnispace to develop satallite-to-phone communications services using space-based 5G technology in Saudi Arabia. stc won spectrum for non-terrestrial-networks (NTN) in the 2100MHz band in December 2022 and will now use Omnispaces’ 3GPP-complimant NTN to deliver broadband connectivity to areas outside its existing land-based network, particularly to underserved areas of the country. Agriculture, finance and automotive sectors are all expected to benefit from advanced services. Zain also signed a Memorandum of Understanding with AST SpaceMobile to explore satellite coverage services to remove parts of the kingdom. Both companies are committed to exploring new telecom solutions and satellite-based digital services in order to increase mobile access.

Earlier this month, the main shareholders of Telekom Austria Group, América Móvil (AMX) and the Austrian government-backed fund Österreichische Beteiligungs AG (ÖBAG) announced an agreement to separate the company’s passive infrastructure in Austria which involves 5,400 towers. A towerco will manage the sites independently, and the spin-off will not result in changes in the core shareholder structure. The spin-off is expected to complete by the end of 2023 after receiving regulatory approvals. AMX and ÖBAG will own the separate MNO and the towerco and the owners intend to list the new towerco’s shares on the Vienna Stock Exchange. AMX is Telekom Austria Group’s majority shareholder holding a 51% stake while ÖBAG holds a 28% stake.

Telekom Austria Group’s Austrian towers (A1 Austria) are the only ones in the group that have not been separated, the company has confirmed to TowerXchange. The group which is active in Central and Eastern Europe has already carved its towers into towercos in Bulgaria, Serbia, Croatia, Slovenia and North Macedonia in the period from 2021 to 2022 but they’re on the balance sheet of the group at present. Once A1’s towers in Austria are spun off, a separate tower company will be set up which will also include the already carved out A1 assets.

A1 Bulgaria, the local subsidiary of Telekom Austria Group and Greek Cosmote will provide uninterrupted 5G and roaming connectivity along the highway between Sofia and Athens under the European Commission’s 5G SEAGULL project. Cosmote will build a 5G network for a 300 km stretch of the border while A1 will do so on a 173 km long section. The total budget for 5G SEAGUL is €22.5 million, 50% of which will be funded by the EC’s Connecting Europe Facility programme. A1 Bulgaria says that project will complete in 2025 and will enable the movement of autonomous cars, improve connectivity in rural areas along the border and provide uninterrupted roaming services between the two countries. Both companies have the highest market share in the countries they operate in, with A1 having about 2,500 towers and Cosmote having about 4,200 towers.

Vantage Towers will work with the German government’s mobile infrastructure company (MIG) and build a tower in the country's Lind municipality which was affected by the Ahr valley floods in 2021. The build will be under the German government’s mobile communications funding programme which subsidises the construction of towers and their operation for a period of seven years, and is aimed at delivering passive infrastructure to underserved regions where there will be no commercial roll-out. Germany's three biggest MNOs - O2 (Telefónica), Telekom (Deutsche Telekom) and Vodafone have already signed up as tenants. Mobile infrastructure had collapsed as a result of the floods and the towerco has worked with MNOs to put mobile transmission stations into operation at the time.

Cellnex Ireland will develop a 5G-enabled smart campus for Dublin City University (DCU). The project is part of Smart DCU, an initiative between the university, the Dublin City Council, and local research institute Insight. Cellnex will provide infrastructure across three campuses to enable 5G roll-out which would support smart city, connected vehicle (V2X) and internet of things (IoT) applications. 5G deployment will facilitate Mobile Edge Computing (MEC) capabilities on the campuses and allow for the increased adoption of bandwidth-heavy applications. Some of the uses of the infrastructure will include augmented reality learning experiences, video analytics and IoT for sports teams and smart building monitoring to encourage sustainable energy use.

On February 14, 2023, Xavier Niel, the billionaire owner of French telecoms group Illiad, increased his stake in Millicom to 19.6% through his investment company Atlas Investissement, making him Millicom’s largest shareholder. The sum of the deal has not been made public. Based on Millicom’s total market capitalisation, the shares are worth around US$700mn. Previously, Atlas acquired a 7% stake in Millicom and at the time labelled Millicom as an “attractive investment opportunity”. In January 2023, the operator posted positive revenues in its recent full-year financial results but saw a hit to net profits due to its Guatemala unit acquisition.

At the end of 2022, Millicom was widely reported as a takeover target. No formal offer has yet been made, but Apollo Global Management and former SoftBank executive Marcelo Claure have been rumored to be potential purchasers. The speculated valuation of Millicom has been set at about US$10bn, including debt. Millicom has previously sold off its African business to focus on its Tigo brand for mobile and cable services in Latin America, where it has about 50 million customers. It also offers Tigo Money, a digital payments product.

The General Superintendence of Brazil’s Administrative Council for Economic Defence (Conselho Administrativo de Defesa Economica, CADE) approved an amendment to the 4G network sharing agreement (RAN sharing) between Vivo and TIM Brasil. Originally signed in 2015, the commitment also included Oi and was adjusted to reflect the latter company’s exit from the mobile market. Under the new terms, RAN sharing should encompass 349 municipalities in 22 of Brazil’s 26 states – especially in locations with low population density. In the original version, sharing involved 706 cities. This excludes the locations that were earmarked for Claro Brasil after the sale of Oi Móvel. The technical solution proposed for the latest contract is based on Multiple Operation Core Network (MOCN), which also allows the sharing of radio frequency spectrum and some active elements of the core network in addition to RAN infrastructure, while the 4G spectrum used in RAN sharing between Vivo and TIM is in the 2.5GHz-2.6GHz range.

The Brazilian Association of Competitive Telecommunications Service Providers, TelComp, asked the Administrative Council for Economic Defence, CADE, to launch an investigation into the collective failure of TIM Brasil, Claro Brasil and Telefonica Brasil (Vivo) to implement remedies associated with the three-way takeover of Oi Movel in 2022. The industry body complained that none of the parties submitted Wholesale Product Reference Offers (Ofertas de Referencia de Produtos de Atacado (ORPAs)), despite being ordered to do so. Consumers face ‘harmful consequences’ as a result of the slow progress, which has hampered the expansion plans of regional operators and MVNOs. Oi’s mobile unit was sold at auction in December 2020, generating a three-way bid of BRL16.5bn (US$3.25bn). The deal went on to close on 20 April 2022. In the meantime, Brazil’s national telecommunications agency Anatel has set up a working group to monitor the operational and financial situation of the Oi Group. The aim is to re-evaluate the measures to deal with possible discontinuity of Oi’s operations, following the troubled operator’s recent request for ‘urgent precautionary relief’ in relation to a potential debt renegotiation. This follows claims that not all of its 65,000 creditors had their claims fulfilled in the December 2022 judicial review.

At the end of last month, Brazil’s national telecommunications agency Anatel confirmed that a further 78 towns have been approved to utilise the 3.5GHz band for 5G services. Locations on the list are situated in the states of Sao Paulo, Minas Gerais, Santa Catarina, Para, Espirito Santo, Rio Grande do Sul, Parana, Pernambuco, Bahia and Rio de Janeiro. All of the featured towns are situated close to larger population centres.

To date, 140 towns and cities have been approved to proceed with 3.5GHz launches, equivalent to 38.5% of the population. By 30 June 2023 the watchdog expects a total of 1,610 municipalities to have received the green light for 3.5GHz connectivity. Coverage obligations for a number of the approved locations do not actually come into force until 2025, meaning 5G launches will depend on the respective rollout strategies of Vivo, Claro and TIM Brasil.

Sitios Latinoamerica (SITES Latam), América Móvil’s recently carved-out tower company, has concluded the acquisition of 1,388 cell towers from Compania Dominicana de Telefonos (Codetel, trading as Claro Dominicana). The deal closed on 3 February. Last month, on 3 January 2023, SITES Latam informed investors that it had acquired 500 cell towers from America Movil Peru (Claro). Post spin-off, SITES Latam had an initial inventory of 29,090 towers on an aggregate basis, 11,600 of which were in Brazil. SITES Latam also operates in Argentina, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Peru, Puerto Rico and Uruguay. Sites in Peru and the Dominican Republic were initially expected to be added to SITES portfolio upon formation, but in late 2022 América Móvil made an announcement that the sites in these countries would be sold to the new entity instead. SITES has been in the meantime undertaking build-to-suit activity for América Móvil in these countries.

Orange Cameroon has announced an investment plan of US$243mn to expand and upgrade its network over the next 5 years with the first US$50mn to be approved this year. This comes in response to Cameroon’s Telecommunication Regulatory Agency (ART) commitment demands to ensure network quality improves in 2023. Earlier this year Cameroon’s three MNOs MTN Cameroon, Orange and Viettel (Nexttel) have all committed to investing US$250mn in expanding network coverage and improving quality of service throughout the country.

The Ethiopian Government is once again moving ahead with its plan to partly privatise state incumbent MNO Ethio Telecom (Ethiotel). A Request for Proposal has been published inviting investors interested in buying a 45% stake the operator, an increase from the 40% stake once mooted. According to the RFP, the government aims to sell a 40% stake in the MNO to a single investor while offering 5% to local investors, retaining 55% majority ownership. The plan to sell shares in the MNO has been in the works since 2018 as a move to clean up the state-run monopoly which has since been broken by Safaricom’s entry into the Ethiopian market.

Rural specialist towerco AMN (Africa Mobile Networks) has signed a Network-as-a-Service (NaaS) contract with Orange to build 500 rural base stations across the country. This will enable Orange to extend 2G and 3G mobile coverage to over 1 million people in previously underserved areas and bring much-needed educational and economic benefits including Orange Money. A significant number of these sites are expected to enter service before the end of 2023. The Madagascan government has been encouraging MNOs to expand services to rural areas to reduce the county’s digital divide. Last month another rural specialist NuRAN Wireless signed a deal with Orange to deploy 500 rural sites in the east of the country.

MTN Group has announced plans to invest US$1bn in Ghana over the next five years following a resolution of the MNOs tax dispute with the Ghanaian government. With the Ghanaian government exempting MTN Ghana from tax claims valued at around US$773mn, the MNO has made financial commitments to expanding the country’s connectivity infrastructure, the majority of the investment going towards 5G technology, which MTN believes could drive further growth across as number of sectors.

The Ghana Investment Fund for Electronic Communications (GIFEC) has completed 50% of its mobile connectivity programme in rural areas of the country. According to the GIFEC, 1,008 of the 2,016 mobile sites being deployed under the Ghana Rural Telephony and Digital Inclusion Project had been constructed, of which 473 are already active. The GIFEC is awaiting funding in order to deploy the equipment for the remaining sites, which have already been delivered. The project forms part of the GIFECs flagship programme funded by the government through a strategic partnership with Huawei and the China National Technical Import & Export Corporation (CNTIC). The 2,016 sites aim to deliver mobile services to over 3.4mn people and increase national mobile population coverage to 95% by the end of 2023.

Starlink has launched their first commercial satellite broadband service in Africa with Nigeria as the continents first market. Starlink’s Low Earth Orbit (LEO) satellites offer high speed, low latency broadband in rural areas. Starlink received their operation license in Nigeria last year and have a 10-year international gateway licence and 5-year ISP license trading as Starlink Internet Services Nigeria. In the following weeks from launching commercial services in Nigeria, Starlink has been issued a license to operate in Rwanda. Starlink will provide broadband services to 500 schools in a pilot scheme starting at the end of February. China Exim Bank is providing US$30mn of funding to the Rwandan government to connect at least 1,500 schools with the World Bank Development project to fund the remainder.

Veon-owned Banglalink and state-owned Teletalk have signed an agreement for the two MNOs to share infrastructure, with independent towerco Summit Towers taking responsibility for technical support. It is not clear which sites the deal includes, but according to TowerXchange data Bangalink own 6,200 towers and Teletalk own 3,500 macro sites. “As the tower operator, we shall make our best efforts to ensure tower-sharing services for the mobile network operators” Summit Towers CEO Md Arif Al Islam clarified.

By acquiring the shares of its subsidiary Nettle Infrastructure, Indian MNO Bharti Airtel has increased its direct holding in Indus tower to 47.95%. Bharti previously increased its shareholding in India’s largest towerco last year, when it bought part of Vodafone Idea’s stake. Vi itself has had the go ahead to proceed with an equity deal with the Indian government, which will see the state own 33% of the operator.

Mitratel have purchased the remaining towers from sister company Telkomsel’s freshly merged competitors Indosat Ooredoo Hutchinson. Indonesia’s largest towerco added another 997 sites to its portfolio as part of the deal. The sale and leaseback had been attracting attention for the fact that in-building equipment was also included, although IOH opted to separate the assets, selling 633 IBS sites to dhost. In total the combined deals raised IOH a $US117mn.

After a deal in March 2022 was reached for JTower to be transferred 6,002 towers was announced, the first batch of 555 towers have now been transferred. In their Q3 2022 results, JTower revealed they had secured 90% of the funding required to buy the assets, with a plan for the remaining 10% to still be disclosed. The financing includes externally raised capital from MUFG, Mizuho Bank, Sumitomo Mitsui Banking Corporation and JA Mitsui Leasing. The full value of the assets is approximately $US870mn, which represents US$144,952 per tower.

Globe Telecom reported it exceeded its targets for network rollout for 2022 by building 2,267 new 5G sites and connecting 1,702 new cell sites. The operator also upgraded more than 13,600 mobile sites to 4G LTE, but TowerXchange understands that its BTS orders for 2023 could be lower than previous years. Having completed sale and leaseback processes in 2022, the operator is expected to review the new co-location potential on towerco built and bought towers, before committing the same number of sites as it did in previous years.

Rumours have been swirling in the market that AIS has held talks with potential advisers for a strategic review of its assets, which could fetch the MNO between US$2-3bn. In August 2021, head of investor relations Nattiya Paopongsakorn, said AIS was studying the prospect of raising funds by spinning off its telecom towers and other assets. This would fall in line with shareholder Singtel’s review of its infrastructure assets across its portfolio as it seeks to take an “asset-light approach.” Local power provide Gulf Energy took a hefty 23% stake in parent company Intouch in 2021, and could see a tower sale as a potential to recoup their investment.