One for all

Tower-shar­ing com­pa­nies eye South Africa

Finweek English Edition - - TECH TRENDS - SIMON DINGLE si­mond@fin­

THE CUR­RENT PRES­SURES fac­ing cel­lu­lar op­er­a­tors from reg­u­la­tory, leg­isla­tive and mar­ket per­spec­tives are forc­ing them to em­pha­sise cost-cut­ting. Now telecom­mu­ni­ca­tions com­pa­nies are in­creas­ingly look­ing at ways to share in­fra­struc­ture. It just makes sense. Why should there be sep­a­rate, ugly cel­lu­lar tow­ers dot­ted all over South Africa when mul­ti­ple op­er­a­tors can eas­ily in­stall all of their equip­ment on shared tow­ers?

In ma­ture mar­kets the shar­ing ap­proach is in­creas­ingly be­ing adopted. There are a few ex­am­ples of cel­lu­lar op­er­a­tors sell­ing their tow­ers to an in­fra­struc­ture leas­ing com­pany and then rent­ing them back, as Tele­fon­ica has done in South Amer­ica. That al­lows op­er­a­tors to raise cap­i­tal and leave wor­ry­ing about main­tain­ing a phys­i­cal tower net­work to some­one else.

Ea­ton Tele­com is a Bri­tish tower in­fra­struc­ture com­pany mov­ing into Africa to fa­cil­i­tate the con­cept of shar­ing. It an­nounced last week it would first launch in Tan­za­nia but was also eye­ing other south­ern African coun­tries: it al­ready has op­er­a­tions in Ghana and Nige­ria. It will both build and buy tow­ers in Tan­za­nia to then lease them to prospec­tive cus­tomers, such as Vo­da­com Tan­za­nia and Zan­tel, the lat­ter be­ing the fastest grow­ing tele­coms com­pany in that coun­try.

Ea­ton has ap­pointed Piet Nel, for­mer CEO of Di­men­sion Data’s Plessey sub­sidiary, to run its of­fice in SA. It also con­firmed it’s been in talks to pos­si­bly ac­quire all of Cell C’s tower in­fra­struc­ture. SA’s third cel­lu­lar op­er­a­tor has been seek­ing such a deal for some time in a move to re­duce debt and fur­ther spread its net­work.

Speak­ing to Fin­week, Ea­ton Tele­com CEO Alan Harper sug­gested strongly the com­pany would have some­thing to an­nounce soon con­cern­ing SA. “There will be an in­de­pen­dent tower player or two in SA over the com­ing months,” Harper said.

Cell C CEO Lars Re­ichelt wouldn’t con­firm a deal with Ea­ton specif­i­cally but af­firmed the com­pany was close to ty­ing up a deal with an in­de­pen­dent tower com­pany. “I can’t con­firm any­thing yet, but we’re close to com­ing to a de­ci­sion.” Re­ichelt said Cell C would an­nounce some­thing within the next month.

John Strand, founder of in­de­pen­dent in­ter­na­tional tele­coms con­sult­ing firm Strand Con­sult, said tower-shar­ing is the right way to go for SA’s op­er­a­tors. “The devel­op­ment you’re now see­ing in Africa is iden­ti­cal to what we’ve seen in a num­ber of coun­tries world­wide. In prac­tice, more and more op­er­a­tors don’t have tow­ers as part of their core busi­ness and with the abil­ity to sell those to out­side part­ners you free some cap­i­tal while shar­ing re­sources with com­peti­tors who also have the same in­ter­est. It’s one of the ex­am­ples where 1 +1 +1 = 5,” said Strand.

“If you look at those who buy and op­er­ate tow­ers – well, it’s an in­vest­ment very at­trac­tive for pen­sion funds. They see the in­vest­ment as a long-term in­vest­ment with a sta­ble cash flow and they see many op­por­tu­ni­ties to de­velop the busi­ness through economies and to ne­go­ti­ate good agree­ments with the peo­ple they rent space or lo­ca­tions from.”

Strand said in­ter­na­tion­ally Tele­fon­ica has sold a por­tion of its tow­ers in South Amer­ica and the trend has also started in the United States. “In a con­ti­nent such as Africa – where there are too many mo­bile op­er­a­tors and where there’s a need for con­sol­i­da­tion – it will be easy to con­clude those agree­ments.”

In SA Cell C has been speak­ing to three com­pa­nies about sell­ing its tow­ers, in­clud­ing Ea­ton Tele­com. Who­ever the fi­nal buyer is, the ques­tion it will face will be whether Vo­da­com, MTN and other tele­coms providers will be as in­ter­ested in shar­ing as Cell C is? By all ac­counts, they will be.

LARS RE­ICHELT Sort­ing it out

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.