Telecoms Firms in SSA Earn U.S.$4 Billion From Tower Sales, Leasing


From the sales and lease of BTS, otherwise known as towers, telecommunications operators in the sub-Saharan Africa (SSA) may have earned about $4 billion in the last four years.

According to statistics from the GSMA in a report titled: 'The Mobile Economy: sub-Saharan Africa 2015', it revealed that tower sharing has now become a key feature of the mobile industry in SSA. According to it, many of the region's leading operators have divested significant portions of their tower portfolios to independent tower companies (towercos) in recent years.

According to GSMA, most tower-sharing deals in the region are commercially oriented rather than mandated by regulators, with the deals been driven by network coverage obligations attached to licenses and cost-reduction pressures as the decline in revenue growth increasingly weighs on margins.

The report noted that funds realised from the sale of tower assets are usually deployed in other priority areas that can improve service quality and operational efficiency, such as investing in next-generation technology and deleveraging through debt reduction.

"Between 2010 and 2014, towercos operating in the region acquired approximately 47,500 towers from operators, equivalent to a third of the total regional tower count, in several deals valued at more than $4 billion", the report informed.

Indeed, Nigerian mobile operators may have raked in about N689.96 billion from the sale of BTS within the same period to 2015, thus leading to massive fall in their capital expenditures.

With the exclusion of Globacom, the trio of MTN, Airtel and Etisalat transferred their towers to third party infrastructure companies in mid 2015.

In July 2015, Etisalat Nigeria completed the transfer of 555 telecom towers to IHS Holding Ltd, leading Africa mobile tower provider, the second tranche of a sale and leaseback deal. The transaction is believed to be in the region of $400 million.

Etisalat Nigeria sold 2,136 of its towers to IHS and leased them back as part of plans to expand its coverage in Africa's largest economy.

Earlier in 2015, Bharti Airtel also sold more than 4,800 mobile phone masts in its Nigerian operation to American Tower Corp for $1.05 billion, as part of its plan to cut costs and reduce its debt. Bharti Airtel agreed to be the anchor tenant on the masts it is selling to American Tower, initially for 10 years.

Chief Executive Officer of Bharti Airtel Africa, Christian de Faria, said this year (last year) that Nigeria is the largest mobile market in Africa and a key one for Airtel.

"American Tower has a proven track record in passive infrastructure management, and we look forward to benefiting from the best practices from all other countries it operates in," he said.

Within the same period, Bharti Airtel also announced that it had raised $1.3 billion with the sale of its mobile towers in five African countries from Helios Towers, IHS Plc and American Tower Company. The proceeds will go towards reducing the $10 billion debt used in its African operations in 2010.

Similarly, MTN Nigeria also sold about 6,000 mobile towers to IHS, which will be raised to 9,000 in due course and thus rake in over $2 billion. The sale will help reduce MTN Nigeria's costs and improve the quality of the network for the operator, which has suffered regulatory infractions in recent times.

Following the deals, IHS, the biggest tower company in Africa, owned and managed more than 15,500 of the installations in Nigeria and more than 23,100 in Africa as a whole. It will own and manage over 6,540 towers in Nigeria, all of which will be managed by the most advanced Network Operating Centre (NOC) in the country.

According to an IHS Holding Ltd data, in Africa, towers and the infrastructure can account for more than 60 per cent of the expense to build a mobile network.

Chairman, Association of Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, said that the outsourcing model adopted by Nigerian network operators "is meant to allow operators concentrate on their core competences and allow those who are better equipped professionally to manage the towers to do so." Nigeria is estimated to have about 26,000 towers.

He said the operators had already outsourced their network operations to experts like Ericsson and Huawei, who in turn outsourced maintenance services like fueling, cleaning and security to local companies. The cost of building one mobile tower is about $150,000-$200,000. Independent tower companies in Nigeria include Helios Towers, IHS Nigeria and Swap Technologies.
Source: The Guardian 7 January 2016