Why mobile telecom towers are big business in AfricaFollow @MadeItInAfrica
The spectacular rise of Africa’s mobile telecommunications industry over the past decade has been well documented. Riding on the back of this growth is Helios Towers Africa, a company that leases space on telecom towers to mobile network operators. By owning and managing the towers, Helios allows the network operators to focus on their core business, which is gaining new subscribers and improving their services. Charles ‘Chuck’ Green, co-founder and CEO of Helios Towers Africa, tells How we made it in Africa’s Dinfin Mulupi about the firm’s success and why Africa has the potential to be one of the most exciting growth stories over the next decade.
What exactly does Helios Towers Africa do?
Helios Towers Africa (HTA) was founded in 2009 and is the leading independent, telecoms tower company in Africa with operations currently in Ghana, Tanzania and the Democratic Republic of Congo (DRC). A sister company (HTN) was founded in Nigeria in 2005 as the first independent tower company in Africa. Together, we own and manage 3,500 telecom towers, the largest number held by an independent company focused exclusively on Africa.
We acquire, build and manage passive telecoms infrastructure, leasing it to operators across the continent. Our model of shared telecoms infrastructure, and its scale, help to deliver improved operating and capital efficiency for mobile network operators, and reduced costs, increased accessibility and better network quality of service for users.
We pioneered the sale-leaseback model in Africa, by buying towers that were owned by a single operator and leasing them back to the seller and multiple other operators simultaneously.
What inspired you to become involved in the telecom tower business?
From a personal perspective, this is the industry I have worked in for 15 years – virtually from its inception. I was formerly CFO and global head of finance at Crown Castle International, one of the world’s largest independent tower operators, so for me focusing on Africa was just a shift in geographical emphasis and an easy decision to make. I co-founded HTN in 2005 and HTA in 2009 to capitalise on what I believe strongly are the best fundamental dynamics for the independent tower model in the world today.
Why did you opt for the tower sharing model?
The independent infrastructure sharing business is a proven, robust model, which is best for HTA because it benefits consumers, operators and regulators, as well as being constructive from an environmental perspective. The timing is right because of the infrastructure investment deficit in most sub-Saharan African markets. Unless telecoms infrastructure investment in Africa increases, it will be impossible to serve the burgeoning levels of consumer demand for 2G voice, let alone the site densification required for 3G coverage, improved capacity and the rapid growth in data traffic. It has been estimated that without an increase in the sharing of infrastructure, the number of telecoms towers will have to double over the next five years from 75,000 to 150,000, and that is just for 2G traffic. Also, for health and environmental reasons, communities and politicians do not want to see an unjustifiable proliferation of towers in their neighbourhoods.
The solution to this is cooperation and tower sharing. This results in higher revenue from better network performance and lower churn; lower and more predictable operating costs; and less risk for operators. Tower sharing is already widespread in the US, Europe, India and South America. It is also the right solution for Africa. That is good for everyone: consumers, regulators, operators and HTA.
You are currently operating in Tanzania, Ghana and DRC. What is attractive about these markets?
We find most of the African continent attractive from an investment perspective; indeed our strategy is to be truly pan-African. We are most attracted to countries which offer the right mix of population size, wireless demographics, political stability and ease of operating. The three countries above offered HTA the right mix of these factors, but there are also many other countries that have similar characteristics, and in which we are very interested as we continue to build a diversified African independent tower company of scale.
Describe the benefits telecom operators derive from outsourcing infrastructure?
In simple terms, we allow operators to focus on what they do best, servicing customers rather than managing infrastructure. This enables operators to increase coverage and capacity quickly, without bearing the operational risk or long-term capital requirements. It also has potentially significant positive implications for the industry’s carbon footprint. Unsurprisingly, this is very popular today, which is why HTA hosts all major African telecoms operators on its towers.
The outsourcing of telecoms infrastructure management is increasingly commonplace with 50% of towers in the US and 60% in India now run by independent companies. Operators are facing increasing competition, falling revenues per user and need to reduce operating cost and capital expenditure and we provide a solution to them. Indeed, to fulfil the infrastructure needs of a continent like Africa, infrastructure sharing is imperative. As such, we are ideally placed and are seen as partners of telecoms operators, rather than competing against them.
Some people are saying that Africa is the next frontier. Do you agree with this? Should foreign investors bet their money on Africa?
The investment profile of Africa has improved dramatically over the past five years. What I would say is that many esteemed commentators – from analysts at banks to international economists as well as companies such as HTA – believe in the exciting opportunities within Africa. It is also a huge continent with a wide divergence in economic circumstances, country-by-country.
Nevertheless, Africa is demonstrating several characteristics which are very encouraging. Democracy is flourishing as is judicial independence and free media. In turn, this has encouraged private ownership and entrepreneurship to flourish, gradually replacing the state as a driver of economic growth. This in turn attracts more foreign direct investment and a virtuous circle of growth, investment and job creation naturally follows.
Against this background, I would say that Africa has the potential to be one of the most exciting growth stories over the next 10 to 25 years, but as with all emerging markets, it is not without risk.