Home Africa and the Middle EastAfrica and the Middle East 2012 A tower of strength for Africa’s telecoms

A tower of strength for Africa’s telecoms

by david.nunes
Charles 'Chuck' GreenIssue:AME 2012
Article no.:11
Topic:A tower of strength for Africa’s telecoms
Author:Charles ‘Chuck’ Green
Organisation:Helios Towers Africa
PDF size:298KB

About author

Charles ‘Chuck’ Green is the CEO of Helios Towers Africa. Formerly Partner, Portfolio Operations Group, HIP, Mr Green has significant tower expertise and was a founder of, and continues to be a director of, Helios Towers Nigeria. Formerly, he was Chief Financial Officer and Global Head of Finance of Crown Castle International, one of the world’s largest independent tower operators. While at CCI, he oversaw all financing activities for the company and raised in excess of US$5 billion of capital, including leading the company’s initial public offering (and subsequent move to NYSE). Mr Green was also a key member of the team that executed ten sale/leaseback and master lease transactions over three years, totalling more than 14,000 sites, with mobile operators and broadcasters in the US and internationally.
Charles ‘Chuck’ Green holds BBA and MBA degrees from the University of Texas and is a Chartered Financial Analyst (CFA).

Article abstract

Early days of mobile growth saw over-population of base stations, often several of them side-by side, operated by competing operators. This was both costly and environmentally unsound. In Africa, unfettered by legacy, the idea of sharing towers has taken hold, as a quick way of increasing mobile penetration, improving network efficiency and quality and conserving capital. Sharing infrastructure is now seen by African governments and regulators as an enabler of affordable access to advanced ICT. What’s more, sharing towers is necessary to support the explosion of demand now experienced in Africa.Operators readily outsource towers to independent tower specialist, and improve their operating cost whilefocusing on their core servicebusiness.

Full Article

The rise of Asia’s tiger economies is well known, but a great untold story is the equally remarkable growth of Africa’s ‘lion’Economy. Six African emerging markets were among the ten fastest growing economies in the world over the last decade or so, according to the Economist Intelligence Unit.
The starting point for Africa’s economic renaissance was the wealth that trickled down from minerals and oil. Among other benefits, this enabled an ambitious new generation of entrepreneurs and business leaders to emerge and prosper. The most recent transformational impact in Africa has been due to a massive roll-out of mobile telephony, with internet and broadband following closely behind. African businesses inspired this development, and so have the continent’s emerging youthful middle classes, who have the same keen appetite for sophisticated goods and services as their Western and Asian counterparts.
Other promising growth industries, such as agriculture industries and financial services, will benefit from the new range of telecom services because it helps facilitate their infrastructure needs at a sustainable level of cost. One great advantage that African broadband and telephony have over their longer established Western counterparts is that they have entered the market at a time when it has become much more advanced and cost effective than when US and European businesses pioneered the new developments. Pioneers, they say, get hit by all the arrows whereas latecomers escape scot-free.Thus while early entrants to the telecoms and broadband sectors have to cope with the ‘legacy’ problems of early systems that have become outdated, African businesses and their consumers have learnt from other people’s experiences and enjoy the benefits of all the latest developments.
As an illustration, let us take the case of telecoms towers. In the early stages of telecommunications expansion, several base stations would typically spring up in one district after another as operators competed to increase coverage. Often some of these base stations were built next to each other and it was not uncommon to see three or four base stations in the same rural village, all operating three or four generators at once.Over-population of base stations has been both costly and environmentally unsound. That is why the launch of independent telecom tower sharing initiatives by Helios Towers Africa was rightly hailed as a significant landmark in the sector. Already it is proving to be a catalyst for the increased use of mobile telephones throughout Africa – and not just in urban areas but in rural areas too.
A whole new world of communications is opening up for millions, providing social benefits for families and friends as well as financial and entrepreneurial benefits for businesses. Entrepreneurial initiatives which were impossible dreams in the Africa of a decade ago are becoming commonplace today – and across national borders as well as inside them.
The independent tower sharing concept was initiated first in the US, Europe and Australia, followed by India a number of years ago. Once the early problems were resolved, tower sharing grew into an invaluable method of increasing mobile penetration, improving network efficiency and quality, conserving capital and expanding data services.
In Africa it has not only been business leaders who have grasped the potential of tower sharing. Governments and regulators also have been quick to understand the opportunity to reduce the proliferation of towers and improve health and safety through encouraging the development of tower sharing.
African leaders have realised that sharing infrastructure has become a critical enabler for governments to increase ICT access in a way that is more affordable and more environmentally sound. For example, with an independent tower company, three operators can now switch to only one telecom tower and use only one generator. This reduces the all-in cost of building and running operations for the operators and allows them to focus on their core business of offering a wider range of services and an improved quality of service. Everyone gains.
In one country after another, the launch of tower sharing enables increased access to a wider range of ICT services, including broadcasting. Rural areas in particular are experiencing a welcome transformation – not just in terms of much needed improvements in rural telephony, but in enhancing the backbone of the entire telecommunications sectorand providing a basic infrastructure upon which all other services can be built.
We can already see a direct link between increases in Africa’s mobile connectivity levels and economic growth in an increasing number of African economies. To put it in context, there were 16 million African mobile subscribers in the year 2000 – and some commentators mistakenly thought that this was a surprisingly high number. Now the number of subscribers has rocketed to more than 600 million and GSM Associates calculate that by the end of the year the total will have reached 735 million, so that two in every three Africans will soon have some form of mobile connectivity.
A consequence of this explosion of demand is that, without an increase in sharing, points of service would need to double from the current total of 75,000 to around 150,000. The relevance of tower sharing increases in parallel with the increase in African GDP (Gross Domestic Product).As well as aiding an increase in GDP, sharing by independent telecom towers companies can additionally contribute to solving Africa’s chronic power shortages – for example, by switching energy consumption away from diesel through the use of alternative and hybrid energy sources and more reliable to grid power – and improve its carbon footprint.
Independent tower companies are specialists in building and maintaining base stations whichact as hubs for local wireless networks and, as a result, they can manage power and site maintenance for operators in a much more efficient and reliable manner than was previously possible. From the point of view of African telecoms operators, owning towers is not part of their long-term core business and thus outsourcing telecoms towers provision to a specialist improves their operating cost structure and enables their technology to be ‘managed’ rather than merely ‘used’. As their market becomes increasingly competitive anything that reduces costs and capital expenditure is more and more welcome.
Tower sharing in Africa has come a long way in a short time since an affiliate of HTA was set up as the Continent’s first independent tower company in 2005. After executing the first sale/leaseback transaction for Millicom’s telecom towers in Ghana in 2010, which was followed by the acquisition of Millicom’s towers in Tanzania and the DRC in 2011, HTA has established the largest number of telecoms towers in Africa – more than 3,500 and still accelerating fast – hosting every major African telecoms operator. One of its attractions for its commercial customers is that it is strictly non-competitive for telecoms operators.
As a base station specialist, HTA achieves uptime levels of 99.9 per cent. It has devised a scalable business model to support likely future as well as current demands of the operators. It has long term contracts with low churn levels and a predictable, recurring cash flow from strong anchor tenants.
In summary, the mobile industry in Africa is booming and is helping to underpin rapid economic growth. In order to take maximum advantage of its potential, African nations need to allocate still more spectrum for the provision of mobile broadband services and embrace telecom tower sharing. Although telecoms has come a long way fast in Africa, for 3G, HSPA, LTE and telecom tower sharing, the best years probably still lie ahead.

Related Articles

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More