Faced with declining revenue, many telecom operators in sub-Saharan Africa have sold their towers to independent tower companies in recent years, and mobile tower sharing has become a key feature of region’s mobile industry, according to to a report in TheGuardian.
Between 2010 and 2014, tower companies operating in the region acquired 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 Global System for Mobile telecommunications Association (GSMA) said in a report entitled ‘The Mobile Economy: sub-Saharan Africa 2015.”
Funds from tower sales are usually used to reduce debt and improve service and efficiency in other areas such as investing in next-generation technology, according to GSMA.
A mobile tower costs about $150,000 to $200,000 to build, TheGuardian reports.
In Africa, towers and infrastructure can account for more than 60 percent of the expense to build a mobile network, according to IHS Holding Ltd., which claims to be the largest mobile telecommunications infrastructure provider in Africa.
Sale-and-leaseback deals involving telecom towers are becoming popular in Africa, as they improve operating efficiency and reduce expenses, TheNational reported in August.
“Many African telecoms markets, including Nigeria, are highly competitive, as well as often being difficult and expensive places in which to operate. So telecoms have come to accept the case for outsourcing passive infrastructure such as towers,” said Matthew Reed, MEA practice leader for London-based Ovum, a market research company.
Most tower-sharing deals in sub-Sahara are based on making money rather than being mandated by regulators, GSMA reported. Deals are motivated by network coverage obligations, licenses and pressure to reduce costs as slowing revenue growth increasingly weighs on margins.
In Nigeria alone, mobile operators earned about N689.96 billion (about $3.5 billion US) from tower sales between 2010 and 2014, reducing their capital expenditures significantly.
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 in the second phases of a sale and leaseback deal. The transaction was in the region of $400 million, TheGuardian reported.
Etisalat Nigeria sold 2,136 of its towers to IHS and leased them back as part of plans to expand its coverage.
Also in 2015, Bharti Airtel 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 debt. Bharti Airtel agreed to be the anchor tenant on the masts it is selling to American Tower, initially for 10 years.
Nigeria is the largest mobile market in Africa and a key one for Airtel, according to Christian de Faria, CEO of Bharti Airtel Africa.
“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.
Bharti Airtel said it raised $1.3 billion selling its mobile towers in five African countries to Helios Towers, IHS and American Tower Company. Proceeds will reduce the $10 billion debt used in its African operations in 2010, TheGuardian reported.
MTN Nigeria sold about 6,000 mobile towers to IHS which will be increased to 9,000, generating more than $2 billion. MTN is fighting a $5.2 billion fine by Nigerian regulators. The sale will help reduce MTN Nigeria’s costs and improve the quality of the network.
As a result of the sales, IHS owns and manages more than 15,500 Nigerian towers and more than 23,100 in Africa.
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