Market Trends of Africa Telecom Towers And Allied Industry
Private Owned Telecom Towers to Register Significant Growth
- Privately-owned TowerCos owns passive infrastructure on a site and leases space on it to MNOs to host their active equipment. They can either be pure-play independent TowerCos with no residual equity retained by an MNO or have a minority stake held by an MNO.
- Companies such as Blue-Sky Towers have been operating in the market studied. A privately owned company with a portfolio of 100 sites in South Africa, with 200 additional sites in the medium-term pipeline. Also, Eagle Towers is another privately owned telecom tower company with a portfolio of around 50 towers in South Africa.
- Countries like Nigeria have also witnessed substantial tower infrastructure growth over the past few years. TowerCos gained significant traction due to their extensive portfolio of telecom towers which helped telecom operators and MNOs to roll out services in record time. In addition, MNOs in the country have indulged in outsourcing various telecommunications infrastructure needs to independent telecom tower providers, thus positively impacting the segment's growth in the region. Market vendors such as IHS buy mobile towers from telecom companies or MNOs, build them themselves, and then lease them back to the operators. The company now operates in Cameroon, Côte d'Ivoire, Rwanda, and Zambia.
- Moreover, as MNOs seek to drive capital and operational efficiency and divest their tower portfolios to focus on their core business, the privately owned telecom tower segment is expected to gain significant traction in the coming years. Greater outsourcing to independent TowerCos could release a significant amount of capital which MNOs can reinvest in their networks to improve network coverage and accelerate 5G rollouts in Africa in the coming years.
- For instance, telecom tower infrastructure company Helios Towers plans to build 1000 telecom towers in South Africa to fuel the growth of 5G. The company has negotiated with local players and wants to buy existing cell towers from wireless carriers like Vodacom and MTN.
- According to the survey conducted by Ericsson, the 5G mobile subscription size is anticipated to cross 104 million by 2027 in the Sub-Saharan Africa region. Such projected growth in 5G mobile subscriptions signifies a considerable demand for 5G infrastructure in the sub-Saharan Africa region.
- Thus, the privately owned telecom tower segment will hold a significant share in the African telecom tower market in the coming years, owing to the increasing demand from MNOs to rollout their network in African countries and the growing acquisition of telecom towers by privately-owned telecom tower companies in the region.
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South Africa to Dominate the Africa Telecom Towers Market
- Rural mobile connectivity is becoming vital in South Africa, as it helps to bridge the digital divide and provides access to information, communication, and services to people living in remote areas. A growing number of telecom tower companies are expanding their infrastructure in rural areas and gaining substantial investments. This is expected to drive the telecom tower market in the country during the forecast period.
- For instance, in March 2023, Infra Impact Investment Managers announced to help its portfolio company, Eagle Towers, secure a ZAR 100 million secured loan facility to support Eagle Towers' growth and expansion plans. The loan facility will help Eagle Towers drive increased telecommunication coverage and reduce access costs in South Africa. Eagle Towers builds, operates, and maintains telecom towers across South Africa, especially in rural areas.
- Moreover, new market vendors are entering the market and acquiring a 4G spectrum to expand network coverage across South Africa. Such developments are analyzed to influence the country's telecom tower market growth. For instance, in May 2023, South African operator Rain announced that it entered the mobile market for the first time. The telco provides high-definition voice calls, SMS, data, and national 4G mobile coverage through its infrastructure. As per the company, after acquiring Spectrum in the 2022 auction, the operator overlays its existing 4G network with a new layer that provides for more comprehensive reach.
- Mobile network operators have made significant progress in rolling out 5G services, positively impacting market growth. For instance, in October 2022, South African telecom operator Telkom launched its 5G high-speed internet network using Huawei Technologies. Telkom, part-owned by the state, joins its larger competitors Vodacom and MTN and rains on the 5G race. The telco wants to boost its fast-growing mobile data and fixed-line broadband businesses amid increasing broadband demand.
- Moreover, the country's government efforts to boost broadband adoption are analyzed to drive telecom tower demand during the forecast period. For instance, the South African government plans to turn off 2G and 3G networks by March 2025 to free up spectrum for 5G and 4G services. Thus, South Africa is expected to be an attractive market for telecom tower companies in the coming years owing to the growth in 4G network coverage, increasing demand from rural areas for telecom towers, and faster 5G rollouts by market vendors.
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