h ardiman t elecommunications l td. financial, strategy and technology consulting h ardiman t...
TRANSCRIPT
HARDIMAN TELECOMMUNICATIONS LTD.
Financial, Strategy and Technology Consulting
http://www.telecoms.net
100 Pall Mall
St James’
London SW1Y 5NQ
+44-20-3239-9849
One International Finance Centre
Central
Hong Kong
+852-8199-0361
Keynote Presentation – TowerXchange Africa 2015
Future Perspectives on African Towers
Enda Hardiman
September 28 2015
Document Reference – HTL-M1-TOWERS-EPH28092015vR
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
Major MNOs and TowerCos
Consolidation Discontinuities
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
1. Bharti
2. Etisalat / MarocTel
3. MTN
4. Orange
5. Vodacom
Original Combined Installed Base of 100,000 Towers
36,000 Now Sold or in Sale / Leaseback, or Shared
All Seeking Sale, Joint Ventures
1. American Tower
2. Eaton
3. IHS
4. HTN
5. HTA
Combined Installed Base of 45,000 Towers
“Low Hanging Fruit” Phase Concluding
Smaller Transactions in Prospect
Two “Big Fives”
MNOs
TowerCos
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
Year Where Seller Buyer Towers Transaction Per Tower Type2015 Egypt Mobinil Eaton 2,000 $131,150,000 $65,575 SLB2014 Rwanda and Zambia Airtel IHS 1,113 $181,000,000 $162,624 SLB2014 Nigeria Airtel American Tower 4,800 $1,050,000,000 $218,750 SLB2014 Ghana, Niger, Burkina Faso, Kenya, Uganda, Malawi Airtel Eaton 3,500 $612,500,000 $175,000 SLB2014 Nigeria MTN IHS 9,151 $882,000,000 $96,383 JV - IHS 48%, MTN 51%2014 Nigeria Etisalat IHS 2,136 $485,000,000 $227,060 SLB2014 Congo B Airtel HTA 300 SLB2014 Rwanda and Zambia MTN IHS 1,269 SLB2013 Tanzania Vodacom HTA 1,149 $75,000,000 $65,274 SLB with Direct Investment2012 Cameroon and Cote d'Ivoire Orange IHS 2,000 MLL2012 Cote d‘Ivoire MTN IHS 931 $141,000,000 $151,450 SLB2012 Cameroon MTN IHS 827 $143,000,000 $172,914 SLB2012 Uganda Warid Eaton 400 SLB2012 Uganda Orange Eaton 300 SLB2011 Uganda MTN American Tower 1,000 $89,000,000 $89,000 JV - ATC 51%, MTN 49%2010 Tanzania Millicom HTA 1,020 $80,000,000 $78,431 JV - HTA 60%, Millicom 40%2010 DRC Millicom HTA 729 $45,000,000 $61,728 JV - HTA 60%, Millicom 40%2010 Ghana, Niger, Burkina Faso, Kenya, Uganda, Malawi MTN American Tower 1,876 JV - ATC 51%, MTN 49%2010 South Africa Cell C American Tower 1,400 $200,000,000 $142,857 SLB with acquisition rights2010 Nigeria Starcomms SWAP 407 $81,000,000 $199,017 SLB2010 Ghana Vodafone Eaton 750 MLL2010 Nigeria Visafone IHS 800 $67,000,000 $83,750 SLB2010 Nigeria Multilinks HTN 400 SLB2010 Ghana Millicom HTA 750 $54,000,000 $72,000 MLL
• More than $4.3b Deployed• 84% of Towers Sold Were Sold by the Big Five MNOs – 36% of Big Five Towers Now Sold – 50,000 Remaining• 99% of Towers Acquired Were Acquired by the Big Five TowerCos• Few Countries Feature Multiple Tower Operators
The Two “Big Fives” Dominate Towers Transactions to Date
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
There are Only MNO Three Positions Worth Having
5
Strong
Market Share
Usually 25% - 35%
Strong in Specific
Market Sectors
Capturing Selected Market
Sectors from Leader
ARPU Consistent
with Income(s) of
Decile(s) Addressed
Usually Operates Nationally
May Have Prioritised Regions
Contender
Market Share
Usually
12% - 15%
Recent Growth
Strong in Specific
Market Sectors
Has ITSELF Defined and
Exploited Specific Sectors
Clear Strategy to
Address Other
Market Sectors
May Operate Nationally
Usually Has Prioritised
Regions
Lead Innovator
Dominant
Market Share
Usually 40%+
Present in All
Market Sectors
Not Losing Market Share
Selectively by Sector
ARPU Consistent
with GDP per Capita
to 15% of
Household Income
by Decile
Operates Nationally
Leader
Viable – All Africa Viable – All Africa
Viable In Very Specific Instances Only
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
MTN Orange Vodacom Bharti Etisalat / MarocTelMkt Posn Mkt Share Mkt Posn Mkt Share Mkt Posn Mkt Share Mkt Posn Mkt Share Mkt Posn Mkt Share
Benin 1 58% 2 28%Botswana 1 70% 2 30% Burkina Faso 1 39% 3 18%Cameroon 1 54% 2 41% CAR 2 32% 3 18%Chad 1 69% Congo-B 2 26% 1 55% Cote d'Ivoire 2 35% 1 36% 4 25%DRC 5 8% 2 34% 1 38% Egypt 2 37% Equatorial Guinea 1 78% Gabon 1 52% 2 12%Ghana 1 45% 3 13% Guinea 1 53% 1 43% 2 Guinea Bissau 1 73% 2 47% Liberia 1 54% Kenya 4 3% 2 40% Lesotho 1 80% Madagascar 3 29% 1 40% Malawi 2 39% Mali 1 55% Mauritius 1 53% Morocco 2 29% Mozambique Niger 2 28% 1 56% 4 9%Nigeria 1 44% 2 21% 4 14%Rwanda 1 60% - Senegal 1 57% Sudan - North 2 30% 1 Sudan - South 2 30% 1 Sierra Leone 3 23% South Africa 2 36% 1 52% Swaziland 1 100% Tanzania 1 37% 2 30% 4 18%Togo 2 26%Tunisia 3 16% Uganda 1 43% 2 30% Zambia 2 40% 1 45%
MNO Risk Profile – 38 Countries of the Big 5
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
African Regions With More than 3 Operators, Big Five Status
1. Bharti
2. Etisalat / MarocTel
3. MTN
4. Orange
5. Vodacom
Secure in Market Shares
MUST Enhance EBITDA
Is in Trouble
Secure
Must Rationalise
Secure
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
Conclusions re Consolidation
Difficult to see Future for Etisalat / MarocTel
Bharti Will Probably Improve EBITDA, and Remain
Orange will Likely Rationalise, and Remain in Strategic Regions
MTN and Vodacom Seems Secure
Growth by Acquisition Could Lead to a “Glut” of Towers
Competent Regional Players Could Gain Enhanced Mass
Econet
Millicom
LTE Players
More Positive Vista for Towers in General
For Leaseup Rates in Particular
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
Infrastructure Sharing
Technology Discontinuities
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
CONSIDERATIONSFundamental Market EconomicsGDP, Penetration, CeilingUnderlying EconomyDemographics, Wealth
DistributionTower LocationsCoverage – Current BandsCoverage – Intended BandsVoice Traffic TrendsData Traffic TrendsTRx CapacitiesSectorisationCompetitive Tower OverbuildTower and Antenna DemandRationalisation ScenariosColocation ScenariosBuild-to-Suit ScenariosTenancies and Lease-up DemandRevenue PotentialScenario and Sensitivity
ModellingRisk Quantification
Risk Mitigation Stratagems
Refresher – How TowerCos Make Money
OUTPUT
Tenancies
Leaseup
Revenue
OpEx (From Tech and Op DD)
CapEx (from Tech DD)
Performance
Scenarios
Sensitivities
Risks
Risk Mitigation
Monetisable Categorisations
A B
BTS
ZoneA B
Overlap
ZoneA B
A B
RATIONALISATION
COLOCATION
OVERLAP
BUILD TO SUIT
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
Dominant Model - Four Types of Passive Tower / Site SharingAlso illustrating, for completeness, possible active backhaul sharing
• Current Models
• Relatively Low-Tech
• Well Established
• Well Understood
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
Active Infrastructure Sharing – Shared RAN and 2G/ 3G Shared Backhaul Cases
• Business Logic is Clear
• Gaining Favour with Regulators
• Threat to Current Tower Models
• But Opportunity for TowerCos –
• Upskill
• Radio Engineering
• Transmission Provision
• End-to-End Support
• Increased Margins
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
Active Infrastructure Sharing – 2G / 3G Shared Transmission Backbone Case
Noteworthy
• MTN’s recent deal with Liquid Telecom
• Areas of Possible Competition / Opportunity
• Node siting
• Dark fibre spans
• Managed Network Services
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
Shared Transmission Backbone
Elements of Radio Access and Backhaul May or May Not be Shared
Unshared Core Elements – Network A Unshared Core Elements – Network BShared OMC
Shared VAS Platforms
For Completeness – Full Network Sharing – 2G 3G Case
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
LTE Vista
Long Term
Sub-$20 Handsets
Tactical RRU Siting
New Radio Planning
Fibre Connection – Short-haul
Recasting
Fibre Connection – Long-Haul
Value of Individual Towers
TowerCo Business Models
Regional Plans
Medium Term
Strategic Acquisitions by MNOs
Penetration of Medium Market Sectors
Complementary to Fibre Initiatives
Demand for Tower Space
900 MHz
1800 MHz (especially)
2600 MHz
Short Term
Penetration of High Market Sectors
Complementary to Fibre Initiatives
Demand for Tower Space
900 MHz
1800 MHz (especially)
2600 MHz
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
Conclusions
WWW.TELECOMS.NETTMWWW.TELECOMS.NETTM
HARDIMAN TELECOMMUNICATIONSHARDIMAN TELECOMMUNICATIONS
Conclusions
Consolidation is Imminent, Especially in Central Africa
Uncertain Future for Orange and Etisalat / MarocTel
Bharti Must Enhance Performance
Current Mid-Ranked Performers May Enhance Positions
Limited, but Clear Opportunities for Niche Players
Smaller Tower Deals Will Predominate
Ferment Will Require Rigorous Zonal Analysis
Technical Discontinuities Open Upskilling Opportunities
LTE is in Prospect, but Not an Immediate Threat
More Complex Businesses, Potentially Higher Margins
MNOs TowerCos