TowerXchange’s analysis of the Sub-Saharan African tower industry

Over 30 tower transactions of scale have been completed in the sub-Saharan African market and towercos now own 56,240 (or 38%) of the region’s estimated 146,947 towers. The vast majority of the region’s towerco owned towers are owned by four players, American Tower, Eaton Towers, Helios Towers and IHS Towers (figure one) although a number of build to suit players continue to show steady organic growth with a handful demonstrating an appetite for tower portfolios that their larger competitors have shied away from.

Two further tower transactions have been agreed and are expected to close in the second half of 2018, American Tower’s acquisition of 723 Telkom Kenya sites and Al Karama’s acquisition of 525 Expresso Telecom sites in Senegal. In terms of other tower transactions, incumbent towercos keep a watchful eye over potential incremental acquisitions in markets where they already have a presence, whilst continuing to evaluate opportunities in virgin SSA tower markets.

Some of the region’s MNOs who have yet to divest their tower portfolios continue to learn from their towerco counterparts, creating dedicated teams to proactively secure co-locations on their towers (such as in the case of South Africa’s Vodacom and Kenya’s Safaricom) or even going so far as to carve out their tower business into a separate unit (such as Telkom’s Gyro Towers).

With a young and rapidly growing population, low mobile penetration relative to other regions, and geographical coverage far from complete, there is significant requirement for new build and co-locations across the African telecoms sector, and both MNO and towerco portfolios will continue to grow as a result. In a recent Hardiman study, commissioned by Helios Towers, Hardiman forecast that in Helios’ four markets alone (DRC, Tanzania, Ghana and Congo Brazzaville), the population will grow by 33mn in the next five years with an additional 47mn subscribers coming online. This growth in the subscriber base will require an additional 12,000 points of service before you even take into account new technologies such as 3G and 4G being rolled out.

In addition to meeting growing demand and extending population coverage, the focus of tower owners in sub-Saharan Africa centres heavily upon driving operational efficiencies, improving site uptime and optimising both opex and capex. Power remains the number one operational challenge and cost across a large proportion of African cell sites, and significant investment has begun into solar and hybrid solutions to reduce dependency on diesel (read the report from TowerXchange’s 2017 African energy working group).

The ESCO model has also begun to gain traction in Sub-Saharan Africa, with MNOs considering outsourcing energy to specialised third parties. As of July 2018, five ESCO projects have been signed in Africa, with further RFPs live in the market. Seen as a complementary option to outsourcing to towercos, an increasing number of players are starting to offer the ESCO model and some observers have suggested that as much as a third of the region’s tower power systems could end up under ESCO management (read TowerXchange’s African ESCO market study and our interview with Orange, who are pioneering the ESCO model in the region).

As MNOs diversify their outsourcing strategies, the region’s towercos are also starting to look at options to diversify their business models. A number of DAS systems have been deployed by towercos in the region, and at least one African towerco is quietly building a small cell centre of excellence. Fibre is becoming an increasingly important focus for the continent’s towercos; IHS holds a license to deploy fibre in Nigeria and is reportedly staffing up its operations, whilst American Tower has signed a partnership with Frogfoot in South Africa, with Helios also looking to enter the market in a similar fashion. One can expect that there will be further partnerships and potential M&A between infracos in sub-Saharan Africa as the trend towards converged infrastrastructure models continues; whilst fibre, DAS and small cells look the most imminent add-ons, the industry is studying how data centres and satellite connectivity could present additional revenue streams.

Significant growth opportunities exist across the entire continent, from new build and co-location to site optimisation. TowerXchange provide a country by country analysis of tower ownership and market dynamics across 23 of the more active tower markets in sub-Saharan Africa.

The who’s who of the African tower sector, from independent towercos and MNOs, to ESCOs, investors and technology experts will be coming together on 9-10 October 2018 in Johannesburg for the 6th Annual TowerXchange Meetup Africa. For further information click here to visit our website.


Country Overviews

Angola

Subscribers: 13.9mn*

Towers: 2,600

MNOs: Two (plus entrance of Angola Telecom and another MNO imminent)

Towercos: ANTOSC

Angola has two MNOs, Unitel and Movicel with Unitel having around about two thirds of the market share in terms of subscribers and Movicel the other third. Unitel has the larger portfolio of towers, possessing 1,700 sites and Movicel is a relatively young network with just 800 sites. In order to reach the level of coverage they are targeting, Unitel needs to add a further 1,000 sites and Movicel a further 2,000. Unitel’s dominance and thus lack of sizeable competition in the market means that it hasn’t had the impetus to invest in its networks but change is on its way.

In late 2017, fixed incumbent, Angola Telecom was awarded a Unified Global’ communications license (covering all mobile, fixed voice, data and TV services). The company plans to launch mobile services in 2018. In addition, the government has announced a competitive tender for a further Unified Global licensee with Vodacom understood to have expressed a high interest in the market.

Whilst infrastructure sharing to date has been limited, a new law came into force in 2016, prohibiting the construction of a new site in close proximity to an existing one. Such legislation will necessitate infrastructure sharing going forward. ANTOSC are Angola’s first independent towerco in the process of building 30 sites with a further 70 sites planned for 2019. The towerco expects to have around 400 sites within three years.

Grid infrastructure in the country is poor with 85% of sites understood to be operating on diesel generators. Unitel in particular have put a lot of focus on renewables, looking at solar hybrid systems on a number of their sites whilst ANTOSC have deployed DG battery hybrids on the first wave of towers they have rolled out.


Figure 1: Tower ownership by Africa’s four largest independent towercos

Burkina Faso

Subscribers: 17.6mn*

Tower count: 1,700

MNOs: Three

Towerco activity: Eaton Towers

ESCO activity: Aktivco

There are three MNOs in Burkina Faso; with Onatel (part of the Maroc Telecom group) and Orange (which acquired Airtel’s opco in the country) having just over 40% market share each and third placed, Telecel with 16% (Source ARCEP August 2017). 3G was launched in the country in 2013 but mobile broadband penetration sits at just 7% in a country of some 18.4mn.

Prior to their opco being acquired by Orange, Airtel sold their towers to Eaton Towers which now possesses a portfolio of 700 sites in the country on which Orange is the anchor tenant. Orange also reports that it leases space on just over 100 towers owned by the other MNOs whilst retaining a portfolio of around 100 sites. ESCO Energy Vision is reportedly in discussions to take over management of the power on Orange’s owned sites.


Figure 2: Acquisitions, build to suit and consolidation shaping Helios Towers’ portfolio

Cameroon

Subscribers: 18.7mn

Tower count: 3,200

MNOs: Four

Towerco activity: IHS Towers

There are four MNOs in Cameroon; MTN, Orange, state-owned CamTel and Viettel-owned Nexttel. In September 2017, Afrimax (which traded as Vodafone Cameroon) had its license revoked and ceased operations in the country.

IHS Towers owns or manages a portfolio of 2,284 sites having acquired towers from MTN and entered into a management with license to lease (MLL) contract with Orange. Orange manage 100 sites outside of their arrangement with IHS.


Figure 3: Growth of American Tower’s African portfolio 

Chad

Subscribers: 8.8mn*

Tower count: 2,000

MNOs: Three

Towerco activity: None

ESCOs: Aktivco

There are three MNOs (Airtel, Tigo and Sotel) and an estimated 2,000 towers in Chad, a country where electrification sits at just 4%.

Airtel had previously agreed the sale of their towers to Helios prior to the transaction being cancelled because of an unfavourable regulatory environment.

To address power issues, Millicom’s Tigo has signed an ESCO contract in the country with Camusat’s Aktivco. Millicom are looking to exit the African market, with Econet reported to have expressed an interest in acquiring their remaining opcos in Chad, Rwanda & Tanzania.


Figure 4: MEA’s biggest tower transactions to date

Congo Brazzaville

Subscribers: 5.1mn*

Tower count: 800

MNOs: Three

Towerco activity: Helios Towers

There are three mobile network operators in Congo Brazzaville, all of which are backed by regional players. MTN Congo and Airtel Congo compete with the much smaller Bintel-owned Equateur Télécom (trading as Azur Congo). Airtel had a 3G monopoly for nearly two years until MTN launched its own 3G service in August 2013 and 4G in December 2016.

Negotiations to sell Airtel’s Congolese opco to Orange lapsed, but MNO consolidation is not a new phenomenon in Congo, Airtel having acquired Warid’s operation in the country in 2014 vaulting them over MTN to become market leaders. 

Helios Towers Africa is the sole towerco in Congo Brazzaville, having closed a deal to acquire Airtel’s 384 towers, representing 49% of the country’s towers. Around half of Helios’ sites are reported to be off-grid, with power availability of on-grid sites averaging 15 hours a day.


Figure 5: Estimated tower counts for selected countries in SSA

Cote d’Ivoire

Subscribers: 31.7mn

Tower count: 3,968

MNOs: Three

Towerco activity: IHS Towers

IHS own or manage a portfolio of 2,518 towers, having acquired sites from MTN and entered into an MLL arrangement with Orange. Number three MNO, Moov still retains their tower portfolio which numbers about 1,000 sites.

The regulator had previously revoked the operating licenses of smaller operators Comium, Cafe Mobile and GreenN in the market before awarding and then subsequently revoking a license from LPTIC (GreenN’s backer). There are understood to be about 400-500 sites which were previously owned by the different parties, with a significant degree of parallel infrastructure.

Overall estimations suggest that the market needs a further 2,000 towers to be added between all operators within the next three years. With regards to power, Orange stated that diesel accounted for 36% and grid 64% of total energy costs in the country and IHS has invested heavily in upgrading their energy equipment, with over 70% of its sites now equipped with solar hybrid solutions.

Figure 6: Tower ownership in Cote d’Ivoire


DRC

Subscribers: 38.9mn

Towers: 4,289

MNOs: Five

Towercos: Helios Towers

ESCOs: GreenWish Partners (and Sagemcom)

Since Orange acquired Tigo in 2016, there are five MNOs in the DRC; Vodacom, Airtel, Orange, Supercell and Africell, with Smile planning to launch 4G services. 

Helios are the country’s only towerco having acquired first Millicom’s and then Airtel’s towers. The Millicom deal involved the operator retaining a 40% stake in Helios Tower DRC which they then restructured to a 24% stake at group level (a stake which they are now looking to monetise). Helios’ acquisition of Airtel’s 950 sites spurred a major decommissioning program, involving the removal of 150 duplicated sites.  Helios have also built well over 100 new sites in the country.  Infratel claims to have built over 800 rural sites for Vodacom DRC. 

With around 4,350 towers serving 38.9mn connections, DRC has one of the highest number of SIMs per tower in the world, and with only 25% of the population having a mobile phone and 50% of the population living in an area with mobile coverage, the potential for growth is huge. 

Grid power is reasonably reliable in Kinshasa, but less reliable in Lubumbashi and Goma. Almost all sites outside these three cities are off-grid and the delivered cost of diesel can be 2.5x more expensive in rural areas, with Helios’ average cost of diesel per tower over double that in its other markets. 55% of Helios’ towers are off-grid and with such high cost of fuel, the case for solar is strong with Helios identifying over 400 sites suitable for the technology. 

Orange has recently signed an ESCO contract with GreenWish Partners to take over energy management of 250 sites, deploying solar-hybrid solutions with their partners Sagemcom.


Figure 7: Towerco footprints in sub-Saharan Africa

Gabon

Subscribers: 2.8mn*

Towers: 1,000

MNOs: Three

Towercos: None

ESCOs: Energy Vision 

There are three MNOs in the market since Gabon Telecom merged with Moov to create the country’s largest operator ahead of Airtel and Bintel’s Azur. Airtel is deploying LTE, but mobile broadband penetration is still only 14% at the end of 2014.

Airtel’s efforts to monetise their towers in Gabon never made much headway, so all the country’s towers remain MNO captive for the time being.

Whilst the electricity grid in the main cities is okay, the grid is much less extensive in more rural areas leading to 30-35% of the country’s ~1,000 sites being off-grid. Energy Vision signed the first real ESCO contract in Africa with Airtel, offering power on a fixed monthly price with no upfront capex. The project encompasses a full solar hybrid system with CDC batteries and has been extended to cover 280 sites (of which 40% are off grid, 10% are on unreliable grid and 50% are on grid). Energy Vision has also been awarded responsibility for all passive elements of the sites.


Ghana

Subscribers: 34.7mn*

Towers: 5,839

MNOs: Eight

Towercos: American Tower, Eaton Towers, Helios Towers, African Towers

Ghana has a crowded MNO landscape with eight MNOs since 2017’s merger of Airtel and Tigo. MTN leads the market, followed by AirtelTigo and third placed Vodafone. The NCA has formally notified Expresso of its intent to terminate the company’s license, with the authority also issuing a similar threat to Glo (both operators having less than 3% market share). The MNOs are joined by three LTE only players – Surfline, Blu and Busy. 

There are three major towercos active in Ghana after a series of four tower transactions. In 2010, Helios Towers set up a joint venture with Tigo as minority partners into which 831 towers were transferred (Tigo has since restructured their stake in the joint venture to a shareholding at Helios’ group level, a stake which it is currently looking to monetise). Shortly afterward Eaton Towers closed their deal with Vodafone Ghana, then American Tower set up another joint venture with MTN to which 1,856 towers were transferred. The latest transaction in the market was the sale of Airtel’s towers to Eaton which was finalised in 2015. In addition to the three large towercos, towerco African Towers has also build a portfolio of 150 macro sites as well as has installed DAS at around 50 different sites including major airports.

Whilst grid coverage and availability is good by African standards (with one towerco reporting over 95% of sites to be on-grid and availability trending towards 20 hours a day), electricity prices have skyrocketed in the past year meaning that the business case for solar and hybrid is strengthened and the use of deep cycle batteries is growing.

Whilst strict permitting and environmental policies had dampened new build in the market, 2018 has seen the amount of new towers being built pick up with 200-250 expected to be added this year (versus around 100 in 2017).

Figure 8: Ownership of Ghana’s towers 


Kenya

Subscribers: 39.4mn*

Towers: 6,629

MNOs: Three

Towercos: Eaton Towers, SEALTowers, American Tower (pending closure of Telkom Kenya deal)

There are three MNOs in the Kenyan market, Safaricom, Airtel and Telkom Kenya.

Market leader Safaricom, which has 69% market share, owns 4,406 of Kenya’s 6,629 towers. Eaton Towers entered the market following the acquisition of Airtel’s sites and currently have a portfolio of 1,200 sites in the country.  Telkom Kenya has recently reached a deal to sell its 723 towers to American Tower, a deal which is expected to close before the end of 2018.

TowerXchange have also been made aware of a new towerco, SEALTowers a start-up focussed on low cost compact tower site solutions and hybrid power innovations, and  which expects to have 500 sites built by Q3 2018.

Extensive new build is required, with Telkom stating their intent to add 500 new sites; towercos have proven the most cost effective way to add new sites MNOs. Safaricom carried out extensive 4G rollout in 2017, Airtel’s 4G rollout has recently commenced after obtaining a license in early 2018. Telkom Kenya is currently piloting 4G.

Around 500 buildings are suitable for DAS with a hundred or so covered already; Safaricom are currently operating shared DAS networks. 

The grid is relatively robust in Kenya with Safaricom reporting that 60% of sites are on good grid connections, 25% on bad grid and 15% off-grid. Safaricom’s internal towerco, which offers co-location on around 800 of the MNO’s sites, is starting to offer power as a service. The majority of Safaricom’s sites are DG plus battery hybrids, with some solar in the mix.

Figure 9: Ownership of Kenya’s 6,600 towers


Madagascar

Subscribers: 9.1mn*

Tower count: 2,020

MNOs: Four

Towercos: Towerco of Madagascar

TELMA, Orange and Airtel operate in the Madagascan market with Blueline the country’s newest MNO. TELMA launched 4G operations in 2015, with Orange and Airtel following in 2017; 4G rollout is still under way to extend coverage across the country. 

Towerco of Madagascar (TOM), initially spun out of TELMA but now an independent towerco in its own right and operates a portfolio of 1,030 sites in the country, just under half of Madagascar’s total towers.

Madagascar represents one of the few markets where Airtel still retains its towers, with the MNO owning a portfolio of 500 sites in the country. There had been rumoured interest in an acquisition of Airtel’s towers, followed by reports that the MNO had signed an ESCO contract, although TowerXchange understands that the opco has decided not to pursue this, instead favouring a review of its managed services contract to bring down costs.

Orange has issued an ESCO RFP in the Madagascan market and expects to award the contract in the first half of 2018.

The operational challenge of operating a distributed tower network, particularly during the rainy season is not for the feint hearted, and with significant energy challenges in the country, (Airtel report that 50% of its sites are off-grid) TOM has been extensively evaluating a number of different energy options including a pilot of a wind project in the country.

Figure 10: Tower ownership in Madagascar


Malawi

Subscribers: 8.1mn*

Tower count: 1,000

MNOs: Two

Towercos: None

There are two MNOs in the Malawian market – Airtel and TNM. Airtel reached an agreement to sell their towers to Eaton back in 2015 but the deal was cancelled with no signs of returning. 

TNM is currently undergoing a project to rollout over 200 towers across the country. TNM launched 4G services in 2016 with Airtel launching in early 2018.


Mozambique

Subscribers: 22.5mn*

Tower count: 4,400

MNOs: Three

Towercos: None

There are three MNOs in Mozambique, mCel, Vodacom and Viettel’s Movitel. The entrance of a third MNO Movitel back in 2012 caused a radical shakeup of the telecoms sector with the Vietnamese-owned operator rapidly deploying their network and securing 49% of the mobile subscriber market share by the end of 2015.

The country has an estimated 3,000 foundation-based towers, supplemented by an additional 1,800 guyed masts (primarily owned by Movitel). Fibre rollout to the tower has been relatively extensive, resulting in microwave backhaul dishes being removed from sites, thus freeing them up for further active equipment.

Infrastructure sharing in the country has been limited, with a just an estimated 50 towers being shared between mCel and Vodacom. The government passed a first reading of a bill mandating infrastructure sharing in November 2015, however talks have stalled. The government has however been putting pressure on operators to share infrastructure in rural areas to meet the country’s universal service access goals, in a country where 68% of the population lives in rural areas.

State-owned mCel has long standing debts and appointed Barclays to oversee the sale of its ~1,000 towers in order to reduce leverage. In July 2016, it was announced that mCel would be merged with fixed line incumbent TDM to create a single more sustainable entity and discussion around a tower sale seemed to fall by the wayside.

There had also been speculation of a potential tower sale at Movitel although a formal process was never announced. Rumour has it that the entrance of Movitel into the market was part of a government plan to expand network infrastructure and then sell the assets. If this were the case, the decision to sell may be more likely to come from FRELIMO than Viettel.

As to who the likely bidders would be in a Mozambique tower sale from either mCel or Movitel, it is not yet clear – mCel’s earlier tower sale announcement didn’t appear to have attracted the interest of the continent’s leading towercos.

In late 2013, a domestic company, TowerCo Mozambique, tried and failed to set up towerco operations in the country. It is thought that the company was unable to reach an agreement on lease rates with mCel and Vodacom and as such, talks were disbanded. We have yet to hear rumours of any other domestic players forming in.

Figure 11: Tower ownership in Mozambique


Namibia

Subscribers: 3.0mn

Towers: 2,000

MNOs: Three

Towercos: Powercom, Atlas Tower

The Namibian mobile market has been dominated by two government owned MNOs: MTC and Telecom Namibia, although the entrance of privately held Paratus following an overhaul of the country’s telecoms regulation has introduced a new level of competition.

PowerCom, owned by MNO Telecom Namibia, is Namibia’s first dedicated infrastructure player. Managing a portfolio of 300 towers, the company has ambitions to integrate further assets into its portfolio. The company has tenancies from all three operators in the market as well as a number of non-traditional tenants. South Africa’s fastest growing towerco, Atlas Tower, has also recently entered the Namibian market

The Communications Regulatory Authority of Namibia has proposed a new regulation mandating infrastructure sharing and prohibiting operators from setting up new infrastructure where there are existing sites. An announcement from the regulator is expected imminently regarding the legislation. The government have also introduced a network facility license category to regulate a designated infrastructure provider in the country.

MTC has announced plans to roll out over 524 rural towers in 2018, with 40 contractors and 17 different suppliers selected for the process.

In terms of power, the country’s electricity grid is extensive and as such, most sites only need rectifiers and battery banks, with back up DGs only on critical sites. Powercom report that only one of their 300 sites is off-grid.


Niger

Subscribers: 9.5mn

Towers: 1,800

MNOs: Four

Towercos: Eaton Towers

ESCOs: Aktivco

There are four MNOs in Niger; Airtel, Moov, Orange and Sahelcom. Airtel sold their portfolio of 600 sites to Eaton, with the transaction closing in 2017. 

Over 50% of the country’s towers are off-grid with Eaton examining renewable energy options (including the repair/ replacement of 200 solar sites the company has inherited).

Orange recently signed an ESCO contract with Camusat’s Aktivco covering an undisclosed number of their ~450 sites in the country.

Whilst new build in the market has been fairly modest, Airtel’s recent turnaround in profitability in the African market, coupled with them obtaining a 4G license means that Eaton expects build-to-suit activity to pick up.


Nigeria

Subscribers: 146.8mn*

Towers: 28,653

MNOs: Four GSM players (accounting for over 99% of the market share), two CDMA operators and host of LTE-only players

Towercos: IHS Towers, American Tower, BCTek Engineering, Communication Towers Nigeria, Pan African Towers (plus a handful of smaller players)

There are four GSM mobile network operators in the Nigerian market, namely MTN, Glo, Airtel and 9mobile (formerly Etisalat Nigeria). In addition to the four GSM players there are two CDMA operators and a host of LTE-only players.

Nigeria is a benchmark tower market for many reasons. It’s the largest mobile market in SSA, with 146.8mn connections among a population of 193.46mn*. It’s the oldest growth independent towerco market in Africa; towercos have been building towers in Nigeria since 2006. Almost half of SSA’s towerco-owned towers are in Nigeria, and over US$2.5bn has been spent by towercos to acquire 79% of Nigeria’s towers. Towercos have proved their ability to deliver 99.9% uptime in challenging grid conditions in Nigeria. Nigeria is not just a benchmark for African towers, it’s proof of the efficacy of the independent towerco model in any emerging market.

American Tower entered the Nigerian market in 2014 following an acquisition of Airtel’s 4,700 towers, whilst IHS acquired the portfolios of Etisalat and MTN in the same year. IHS has further consolidated its position in the market, acquiring HTN Towers portfolio of 1,211 sites as well as sites from Hotspot Network. IHS’ acquisition of HTN Towers also included a MLL contract for SWAP’s 368 towers, IHS has however since terminated the agreement.

A deep recession and the devaluation of the Naira had a major impact on Nigeria’s MNOs with knock on effects for their towerco partners. Unable to service a loan, Etisalat’s opco in the country was taken over by its creditors and rebranded to 9mobile; at the time of going to press, 9mobile is in the process of being acquired by Teleology Holdings. Towercos continue to recover lease payments owed by the operator.

MTN, whose NGN330bn fine for a failure to disconnect unregistered SIMs compounded their financial challenges, also struggled to make lease payments to towercos, with the operator recently renegotiating their contract with IHS. According to a statement from the operator, the new terms have “facilitated certain network volume commitments and provided more attractive terms for MTN Nigeria’s future network roll-out applicable from 2018 onwards”.

During 2017, IHS’s restricted company in the country IHS Netherlands Holdco (which held the towers outside the former MTN joint venture) reported that its co-location rate decreased to 1.55x (from 1.66x at Dec 2016) following the removal of “non-performing” customers. The company added 200 towers, 221 co-location tenants and 473 lease amendments during the course of the year and reported revenue and EBITDA increases of 14% and 44% respectively on 2016 figures.

IHS has invested heavily in upgrading power systems through their ‘Big Five’ initiative in the country, replacing diesel generators with solar hybrid solutions on over 10,000 towers. IHS Netherlands Holdco report that power costs were $59.5mn in 2017, down from $74mn in 2016.

Figure 12: Tower ownership in Nigeria


Rwanda

Subscribers: 8.5mn*

Towers: 1,300

MNOs: Two

Towercos: IHS Towers

There are now two MNOs in the Rwandan market following Airtel’s acquisition of their larger rival, Tigo in early 2018. The new unit moved ahead of their competitors, MTN, in terms of market share.

IHS has acquired both Airtel’s and MTN’s Rwandan towers and, after having added build-to-suit towers and undertaking decommissioning work, now owns a portfolio of 841 sites. As a small market, new build is limited and decommissioning is still required.

IHS have announced that they are assessing solar farm opportunities in Rwanda that could potentially supply power to the national grid in the first ‘energy swap’ model to be used in Africa.

Of all the SSA regions, Rwanda is showing some of the strongest promise in small cells and DAS making it a key target for such companies looking to enter Africa; IHS have explored shared DAS.


Senegal

Subscribers: 15.8mn*

Towers: 3,159

MNOs: Three

Towercos: Al Karama Towers (pending closure of Expresso deal)

There are three MNOs in Senegal – Orange owned Sonatel leads the market, followed by Tigo and Expresso. Millicom is selling its opco, Tigo, to a consortium involving NJJ, Sofiman and Teyliom Group after having abandoned the sale to Wari.

Expresso Telecom has agreed the sale of their towers to newly formed towerco, Al Karama Towers. The sale and leaseback transaction also includes first right of refusal on new build for Expresso, with the operator planning to add an additional 200-250 sites in the next twelve months as part of the regulatory mandate for MNOs to increase coverage to underserved areas of the country. The transaction is expected to close imminently.

Sonatel (in which Orange has a controlling stake) had reportedly looked into a sale of its towers previously but talks failed, reportedly due to workforce resistance. Speculation has arisen as to whether the change in ownership of Tigo could precipitate the sale of towers, a portfolio likely to prove attractive to Al Karama Towers.

Sonatel is the only operator to possess a 4G license in the country but Tigo and Expresso had expressed a strong interest in securing licenses, with the sale of Expresso’s towers designed to raise capital for such a license. In February 2017, the Senegalese regulator, ARTP granted three new ISP licenses to locally owned entities, following in the footsteps of Hayo which is providing coverage in the Matam region. The introduction of the new ISPs is hoped to reduce consumer prices and improve the quality of service; it also presents additional tenants for Senegal’s new towerco.

There have been reports that a joint venture between South Korea’s SK Telecom and Middle Eastern firm CKG Group has applied for a fourth MNO license in the country, in a bid to access Senegal’s nascent LTE market.

Figure 13: Ownership of Senegal’s 3,159 towers


South Africa

Subscribers: 89.4mn*

Towers: 28,199

MNOs: Four, plus new market entrant, Rain

Towercos: American Tower, Atlas Tower, Sentech, International Tower Corp, Eagle Towers, Coast to Coast, Blue Sky Towers, Pro High Site Communications, Sky Coverage and Comco plus Telkom’s Gyro Towers

There are four MNOs in the South African market – MTN, Vodacom, Telkom and Cell C, with new data focussed MNO, Rain, having recently launched. 

Towercos have struggled to get a foothold in the South African market since Cell C sold their portfolio to American Tower back in 2010; with Cell C currently rebuilding their own tower portfolio. Telkom has carved out their tower business into a separate unit, Gyro Towers in order to better commercialise its 6,500 towers. Vodacom has developed a successful commercial towerco business model in house, including a platform on which other frequency holders can view available space on Vodacom sites. Towercos have long been eyeing up MTN’s portfolio of 10,500 sites with the operator having previously hinted at its appetite to divest the assets, there are however no signs of an imminent tower deal. 

A long tail of build to suit towercos have emerged in South Africa, headed by the rapidly growing Atlas Tower which now has a portfolio of 501 sites in the country. Broadcast towerco, Sentech has 340 sites which it promotes for co-location. Eaton Towers had built a portfolio of 300 towers in the country before being acquired by American Tower back in 2016. With disagreements over lease rates, three of South Africa’s four MNOs have issued a moratorium on the use of American Tower sites and new build is being given to some of the country’s smaller players, whilst also supporting managed service companies to retain tower portfolios.

The power grid is robust and widespread in South Africa, with MTN reporting that all but 53 of their 10,500 sites are on-grid. Unlike the majority of their sub-Saharan African counterparts, South Africa’s towercos tend to operate a steel and grass model more akin to the developed markets of Europe and the U.S. with power managed as a pass through.

Towercos have begun to eye up the fibre market in South Africa, with American Tower signing a partnership with fibreco, Frogfoot, whilst Helios Towers is understood to be in negotiations with another fibreco in the market.

Figure 14: Ownership of South Africa’s 28,071 towers


Tanzania

Subscribers: 40.1mn*

Towers: 8,257

MNOs: Nine

Towercos: Helios Towers

Helios own 3,489 towers in Tanzania having acquired both Vodacom and Millicom’s portfolios in the country as well as Zantel’s mainland sites. In the Vodacom transaction, Vodacom sold 100% equity in the towers but obtained a 24% stake in Helios Towers Tanzania, a stake which Helios has since purchased. In the Millicom deal, Millicom and Helios formed a joint venture in which Millicom held a 40% stake, the 40% stake was then restructured into a shareholding at Helios’ group level, a stake which the operator is now looking to monetise.

In 2016, Airtel agreed the sale of the 1,350 sites to American Tower, but the deal was cancelled. One of the biggest contributing factors to the calling off of the deal was the introduction of a new legal requirement for telecom companies to list a 25% stake on the Dar Es Salaam stock exchange; a ruling which was introduced after the deal was announced and a ruling which applies to towercos as well as operators. Vodacom have been the first company to issue their IPO prospectus but with limited liquidity in the local market, the process has had to be opened up to international investors.

In addition to Tigo, Vodacom, Airtel and Zantel, Smart, Halotel and TTCL are present in the market, with each of the main MNOs dominant in a different part of the country. Halotel has been particularly aggressive in their national rollout, driving significant additional tenancies to Helios. Azam Telecom became the newest MNO to be awarded an operating license and expects to start rolling out its network imminently.

Helios report that approximately 80% of their towers in the country are on-grid, with grid availability currently around 20 hours per day. 

In July 2016, it was announced that each of the three main MNOs have entered into a RANsharing agreement to improve coverage in rural areas.

Figure 15: Ownership of Tanzania’s 8,259 sites


Uganda

Subscribers:

Towers: 3,554

MNOs: Eight

Towercos: American Tower and Eaton Towers

There are 8 MNOs in the Ugandan market; MTN, Airtel, Africell, Uganda Telecom, Smart, Smile, i-Tel and Afrimax (which trades under the Vodafone brand through a partner market agreement with the MNO). Afrimax has recently filed for bankruptcy in the country. 

Eaton Towers has completed three tower transactions in Uganda, acquiring the towers of Orange, Warid and Airtel. Airtel has since acquired Warid whilst Orange has sold out to Africell. Eaton Towers now has a portfolio of 1,300 towers in the country.  American Tower entered into a joint venture in the country with MTN (with American Tower having a 51% controlling stake in the joint venture). American Tower now has a portfolio of 1,462 towers in the country. Around 150 new towers are expected to be added by the two towercos in the next 12 months” 

Around 27% of sites are off-grid, with about half of new build being off-grid. Grid outages are common, even in Kampala, meaning that lots of investment is going into hybrid solutions. Eaton currently have a pilot study underway to assess hybrid solutions under both capex and opex models.

Figure 16: Ownership of Uganda’s 3,523 towers


Zambia

Subscribers: 13.6mn*

Towers: 2,300

MNOs: Four

Towercos: IHS Towers

There are now four MNOs in the Zambian market, with UZI Zambia (a unit of MNO Unitel which has operations in Angola, Sao Tome and Principe, Cape Verde and Portugal) being awarded a license in March 2018. UZI Zambia joins Airtel, MTN and Afrimax (which trades under the Vodafone brand).

IHS Towers have acquired the portfolios of both MTN and Airtel and now have a portfolio of 1,714 sites in the country which has an estimated 2,300 towers. IHS has been investing heavily in solar hybrid solutions in the country with around 20% of sites hybridised as of Q2 2017.


Zimbabwe

Subscribers: 14.0mn*

Towers: 2,700

MNOs: Three

Towercos: Eighty Four Dynamics

ESCOs: Distributed Power Africa

There are three MNOs in Zimbabwe, market leaders Econet Wireless alongside NetOne and Telecel (with the government having a stake in the latter two). POTRAZ, the Zimbabwean telecoms regulator has proposed a revamp of existing legislation. The regulator had previously announced its appetite to promote infrastructure sharing in the country.

Econet owns the largest tower portfolio in the country with around 1,500 towers; the operator had initially planned to carve out the towers into a separate business unit, Ecotowers, but plans appear to be on hold. Telecel and NetOne own around 600 towers each. Econet reports that it currently uses around 60 third party towers. 

With regards to the power situation, Econet reports that just 46 of its towers are off-grid, running on solar battery hybrids. Grid availability for on-grid sites in Zimbabwe is good, currently sitting around 95%. Econet is forming an in-house ESCO called Distributed Power Africa.

Figure 17: Ownership of Zimbabwe’s 2,700 towers

Figure 18: TowerXchange SSA towerco activity and tower transaction heatmap

Figure 19: TowerXchange SSA ESCO heatmap

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