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‘Nigeria to reach 75% independent tower ownership’

Nigeria to reach 75% independent tower ownership.

Nigeria is on track to become Africa’s first country to hit the global average of 75% ownership of telecoms towers by independent firms, says an expert.

Telecom firms in African nations such as Nigeria are joining their European and North American counterparts by selling off tower infrastructure to private companies.

Selling off this infrastructure helps telecom operators reduce capital expenditure while also opening up leasing opportunities.

And Nigeria has been at the forefront of high profile African tower deals this year, as MTN has sold 9,151 of its base stations in the country to IHS Holding. Etisalat Nigeria has also sold 2,136 of its towers to the same company.

Terry Rhodes, co-founder of infrastructure company Eaton Towers, told ITWeb Africa that Nigeria is at the forefront of Africa’s cell towers business.

“Africa is at about 25% independent tower ownership. In other countries the trend for independent ownership has reached 75% plus, and if the announced deals are completed Nigeria will be at that level,” he said.

“Across Africa, it will not reach 100% but will continue to grow significantly.”

Key factors motivating telecom providers to sell off their tower infrastructure include increasing demand on operators’ infrastructure as well as greater regulatory pressure for better quality of service (QoS), Rhodes told ITWeb Africa.

“The African operators are all facing increasing demand for their services as the unique customer base is still only 33% and typically each new customer has lower spending power than the average to date,” he said.

“In addition, the rollout of smartphones massively increases the demand for data services, which are growing 50-100% but without revenue growing in line. Facebook has over 100 million customers in Africa, most of whom access via mobile phones.

“Regulators require better coverage and quality and in some cases have fined or ordered operators to stop selling until quality has improved,” Rhodes added.

QoS is a big issue in Nigeria, where the Nigerian Communications Commission (NCC) in February sanctioned three major network operators - MTN, Globacom and Airtel - with fines totalling N647.5 million for breaching key performance indicators (KPIs).

“So, with all these pressures operators have to cut costs, and outsourcing their towers is an attractive solution. They can then focus on improving services to customers and rolling out new technologies,” Rhodes said.

“The tower companies offer pure focus and an incentive to develop sharing and efficiency improvements.”

He said Africa’s economic growth of over 5% per year along with a bigger middle class and growing population have made the continent an attractive proposition for companies such as Eaton Towers.

“This translates into increased demand for wireless services and yet 3G rollout is still under 20%,” he said.

“This growth, combined with the pressures on operators described above, mean that tower companies find Africa attractive.”

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