Tanzania: Mobile Phone Operator Outsources Tower Services
Vodacom Tanzania has sold its entire tower network assets to Helios Towers Africa in a US$75 million deal that will further the mobile phone operator's outsourcing drive.
The deal sealed last Monday involves the transfer of 1,149 existing telecoms towers from Vodacom to Helios and a commitment to an ambitious short-term rollout leading to a significant increase in towers, more than double the firm's infrastructure in Tanzania.
As a result, Helios will provide close to 2,700 points of service to Vodacom and affiliates across the country. Helios Towers Africa, an African infrastructure company backed by funds managed by George Soros, Madeleine Albright and Jacob Rothschild, has already struck a similar deal with Millicom (operators of the Tigo mobile network) in the country.
When contacted for comments, a Vodacom Tanzania External Communications Officer, Salum Mwalimu said they would issue a statement later. The outsourcing deal marks the first time that British telecom has sold infrastructure assets in Africa.
The company undertook similar sale in India in a cost cutting measure. When mobile telecom companies sell towers, they free themselves from the operational cost and responsibility involved to other companies.
They also generate an upfront payment, although typically they need to lease back their former infrastructure assets over a long-term contract. Vodacom will through the newly inked deal transfer 1,149 telecoms towers to Helios Towers Tanzania (HTT), which will also install new towers.
Upon completion, HTT's presence in Tanzania will double, having already struck a similar deal with Millicom, the operators of Tigo mobile network in the country, with both companies enjoying access to enlarged network. Outsourcing of tower infrastructure is a growing business practice worldwide today although it is more common in the US.
It has, however, recently gained popularity in Africa because of increased mobile penetration rates and competition. The practice allows a third-party infrastructure company to buy and share multiple networks among rivals to create economies of scale as operators increase their network coverage at minimal costs.
With the new deal, Helios Towers will expand its coverage in Africa to 4,700 owned towers in Ghana, Tanzania and the Democratic Republic of Congo (DRC). Vodacom Tanzania, a subsidiary of Vodacom Group Limited of South Africa, boasts as the leading cellular phone service provider in the country.