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Welcome to the 7th TowerXchange Meetup Africa

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TowerXchange’s analysis of global and SSA telecom infrastructure

Kieron Osmotherly, CEO, TowerXchangeMatthew Edwards, Head of Research, EMEA, TowerXchange

Join the conversation: #TXMeetupAfricaCommunity:

www.moreconference.com/signin/register/c/towerxchange-meetup-africa-2019 morecode: 34BA6

Research: www.towerxchange.com

Networking club for towercosMeetups, CXO dinners, must-read-journal, 3 million words of research, who’s whos

Meetup Asia 2019 3-4 December, Singapore

Meetup MENA 2020 28-29 January, Dubai

ESCO Roundtable 2020 March, Casablanca

Meetup Europe 2020 19-20 May, Barcelona

Meetup Americas 2020 23-24 June, Boca Raton

Enabling 5G 2020 September, Beijing

Meetup Africa 2020 13-14 October, Johannesburg

TowerXchange is tracking 305 towercos that now own 71% of the world’s 4.66mn towers

[1] China Tower Corporation area reduced to better illustrate the relative global market share of the other towercos - if illustrated to scale, CTC’s area would be 1.45x the rest of the industry combined![2] Cellnex count does not include the acquisition of 10,700 towers (+4,000 BTS) from Iliad+Salt as the deal is announced but not yet closed. Count does include recent acquisition of Cignal[3] Reliance Jio Infratel is not yet trading, but the entity seems likely to be acquired from RIL by Brookfield[4] Vodafone and Hutchison towercos announced in Q219 but neither appears to be actively trading yet. Counts include Vodafone’s stake in Cornerstone (UK), and Hutchison’s towers managed by MBNL (UK) and by 3GIS (Sweden)[5] TowerXchange estimates that a further 60,230 towers are owned by small private towercos whose names we don’t know, the majority of which are in China, Vietnam and Indonesia

China Tower Corporation1

1,954,000

31 other towercos with 5,000-20,000 towers327,129

2345 other towercos with <5,000 towers142,785

American Tower170,297

Reliance Jio Infratel3

175,000

Indus Towers 123,546

IHS Towers 23,863

Cellnex2 24,078

SBA Communications29,723

GTL Infrastructure27,707

Hutchinson towerco4

28,500

edotco 29,325

Deutsche Funkturm29,200

Bharti Infratel 40,388

Crown Castle 40,039

Reliance Infratel43,263

Vodafone TowerCo3

61,700

Source: TowerXchange

Towercos by revenue and EBITDA

China Tower C

orpora

tion, C

hina

Americ

an Tower, Glo

bal

Crown C

astle

, USA

Indus T

owers, I

ndia

Bharti I

nfrate

l, In

dia

SBA Com

munica

tions,

Americ

as

IHS Towers

, SSA

Cellnex, E

urope

Deutsch

e Funkturm

, Germ

any

edotco, S

& SE A

sia

Arqiv

a, UK [2

]

INW

IT, I

taly

Prote

lindo, I

ndonesia

GTL Infr

astru

cture

, India

Helios T

owers, S

SA

Telesit

es, M

exico

Tower Bers

ama, I

ndonesia

STP Towers, I

ndonesia

US$mns

Revenue

EBITDA

12,000

10,000

8,000

6,000

4,000

2,000

[1] IHS Towers EBITDA estimated based on results disclosed by IHS Netherlands Holdco B.V., a subsidiary which operates 27% of their portfolio[2] Arqiva revenues and EBITDA drawn from their telecom business only, excluding their broadcast, satellite and media businesses Source: Company reports

Here is a list of 21 other towercos which don’t disclose financial data, but which TowerXchange forecast generated total annual revenues in excess of US$100mn in FY18: Axicom, AustraliaCETIN, Czech Republic*Cornerstone, UKDIF, ThailandDigital Bridge, LatAm, USA & EuropeEaton Towers, SSAEI Towers, Italy*Global Tower, EuropeGrupo TorreSur, BrazilGuodong, ChinaGyro Towers, South AfricaHivory (formerly SFR Towerco), FranceMBNL, UKMiteno, China*Mitratel, IndonesiaPhoenix Tower International, AmericasRAIWAY, Italy*Russian Towers, RussiaTDF, France*Telxius, Europe & LatAmTower Vision, India *Total revenue for these companies includes substantial broadcast tower or other revenues

21 further towercos with revenue >US$100mn

Towerco penetration and business models in different regions


China

India

CALA Oceania

S & SE Asia(Exc India)

Europe

N & E Asia(exc China)

96.1% 3.9%

29.3%

13.7%

10.5%

46.6% 67.8%21.2%

11%

100%

11%

45.4%43.4%

13.4%

86.6%

USA & Canada

6.5%

64%

29.5%

11.2%

SSAMENA94.2%

0.2%0.4%

5.2%4.3%

36.3%

59.5%

Operator-led towerco Pureplay independent towerco Joint venture infraco MNO-captive sites

China

India

CALA Oceania

S & SE Asia(Exc India)

Europe

N & E Asia(exc China)

97.3% 2.7%

15.4%

15.5%

9.6%

59.6%46.6%

21.8%

31.5%

14.7%66.1%

19.2%100%

11%

36.1%48.2%

13%

87%

USA & Canada

7%

66%

27%

15.6%

SSAMENA99.5%

0.01%0.04%

4.6%59.2%

36.2%

Global

56.2%

13.4%1.4%

29%

15.2%64.8%

20%

Will towercos evolve into holistic digital infracos?

Will towercos evolve into holistic digital infracos?

How relationships between towercos and MNOs must evolve from landlord-tenant to holistic digital infrastructure partnerships

< From landlords to digital infrastructure problem solvers< Need for earlier visibility into network capex plans< Neutral host, MNO, vendor and municipalities partnerships< If it works, towercos will evolve into holistic digital infracos…< …If not, more towers will be ring- fenced within captive towercos< …And 5G deployment will be sub- optimal

Man

agin

g A

ctiv

e E

qu

ipm

ent

Shar

ed B

ack

hau

l

Net

wo

rk-a

s-a-

serv

ice

IoT

Ser

vice

s

Dat

a Se

rvic

es

Mo

bil

e E

dge

Co

mp

uti

ng

Met

ro F

ibre

FT

TT

BT

S H

ote

ls

Uti

lity

Po

les

Ou

tdo

or

Smal

l C

ells

& D

AS

IBS

>500

k s

qft

Cit

y P

ole

s

Ro

ofto

psCore

macrotower

business

Pow

er-a

s-a-

serv

ice

IBS

<500

k s

qft


< How far to diversify to meet carrier needs?

< How far to diversify without dilution of value?


< How far to diversify to meet carrier needs?< How far to diversify without dilution of value?

Estimated tower counts for selected countriesin SSA

Nigeria 30,540

SouthAfrica30,183

Tanzania 8,278

Angola3,318

Namibia749

Rwanda1,300

Gabon1,000

Malaawi1,000

BurkinaFaso2,380

Niger1,800

Chad2,000

Botswana850

Congo B 800

Zambia2,300

Madagascar2,310

Cameroon3,072

Zimbabwe2,700

Ethiopia8,000

Kenya7,591

Ghana6,605

Mozambique

4,400DRC4,293

Uganda3,554

Cote d’Ivoire

4,271

Senegal3,925



R

Eaton Eaten

2,659American

Towersites

2,035 sitesincluding1,320 from

Eaton

3,016 American Towers

sites including1,460 from Eaton

3,767 AmericanTower sites

including 1,420from Eaton

670 Eaton sitesto be acquired byAmerican Tower

640 Eaton sitesto be acquired byAmerican Tower

4,772American

Towersites

*Please note towers are being added every week, so this count will change by close

< American Tower enters two new markets: Burkina Faso and Niger< Towerco consolidation in Ghana, Uganda and Kenya< Paid an EBITDA multiple of c. 13.2x, with a 1.5x tenancy ratio< Airtel Africa now represents 35% of American Tower EMEA’s revenue

IHS Towers continue to invest

IHS Towers

American Tower

Pan African Towers

BCTek Engineering

Communication Towers Nigeria

Hotspot Network

Other small Nigerian towercos

Globacom

NATCOM

6,000

550

20075500

7001,300

16,390

4,772

< Following economic downtrurn, new site rollout had been scaled back but is picking up again. IHS adding over 1,000 net sites in recent years< Alternate providers: Pan African and other private towercos< IHS rolling out hybrid systems on up to 12,000 sites

Tower ownership in Nigeria


IHS Towers outside Nigeria

< Decommissioning > new build in Cameroon and Zambia< Rwanda and Cote d’Ivoire see double digit site growth< Major investment in solar and hybrid systems continues in all countries < Global ambitions, including in Middle East and the Philippines

IHS Towers’ African tower portfolio

Tower ownership in Cote d’Ivoire


Cameroon2,220

Cote d’Ivoire2,689Nigeria

16,390Rwanda

855Zambia

1,709

IHS acquired from MTNIHS (under MLL contract for Orange)IHS builtMoovOrangeTo be transferred to 4th license holder

820450174

1,1741,000

695

Niche players perform valuable role

< Atlas Towers challenging Big 4 as SBA buys in< South Africa and Nigeria have stock of alternate providers< Local players performing valuable roles in single countries< MNOs still want more sustainable alternate tower builders

Single-country towercos Source: TowerXchange

South AfricaGyroTowers

Coast to coastBlue Sky Networks

SentechComco

Eagle TowersSky Coverage

International Tower CorporationAtlas Towers SA (SBA Communications)**

NigeriaBCTek EngineeringHostpot Networks

Communication TowersSecured Towers

GhanaAfrican Towers

SenegalAl Karama

Towers

ZimbabweEighty Four Dynamics

KenyaSEAL Towers

NamibiaPowerCom

MadagascarTowerco of

Madagascar

BotswanaPula Towers

AngolaANTOSC

**Pending SBA acquisition of Atlas Tower SA

Atlas Tower SA acquired

< Atlas Tower sustains market-leading growth< SBA to exercise options to acquire 94% of Atlas Tower SA< SBA has made a total investment of US$140mn< Atlas SA to generate US$31mn, adjusted EBITDA of US$21mn in first FYT< Tenancy ratio of 2.2< Considering offering power-as-a-service to its tenants

Growth of Atlas Tower’s South African tower portfolio Source: TowerXchange

Q1 2015

800

700

900

600

500

400

300

200

100

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018*

Q3 2018

Q4 2018

Q1 2019

Q3 2019

5 8 1720 70 92 120

155207

236310

375455

518691

748 800900

Nu

mb

er o

f to

wer

s

Helios Towers’ fifth market

< Partnering with Vulatel: towers, fibre and edge data centres< Offering power-as-a-service in market shake-up< Acquired of SA Towers, 100 sites and 500-strong pipeline< Aim to own 1,000 sites by 2023

Projected tower build in South Africa Source: TowerXchange

2019

30,183

2020

31,050

2021

32,200

2022

33,500

2023

35,000

2024

37,00040,000

35,000

30,000

25,000

Tota

l tow

ers,

roo

ftop

s an

d s

mal

l cel

ls

Helios Towers considers IPO

< Tanzania and DRC: 83% of Helios

Towers’ US$191mn revenue

< EBIDTA margin climbed to 52%

< Exploring lithium-ion for up to a

quarter of sites

< Apologies for their absence! IPO

could be next week

< Tipped to value company at

US$1.42-1.79bn

2019 Revenue Breakdown by Country


South AfricaTanzaniaDRCCongoGhana

42%

41%

6%10%

0%

MTN’s plans to give everyone a modern, connected life

< 5,000 rural sites across all their

African markets by end of 2020

< CHASE programme: Coverage,

Handsets, Affordability, Services

and Education

< Three categories covering rural,

ultra rural and ultra-ultra rural

MTN’s history of tower sales


[GREEN] - Sold to IHS[GREEN STRIPED WITH YELLOW] - JV with IHS[RED STRIPED WITH YELLOW] - JV with American Tower[PURPLE] - Cancelled transaction looking likely to return[YELLOW] - MTN retains towers[GREY] - No opco present

Sold to IHS

JV with American Tower

MTN retains towers

No opco present

MTN’s plans to give everyone a modern, connected life

MTN’s rural RFP technical requirementsDescription Rural Ultra Rural Ultra-ultra Rural

Geography Villages situated 50-100km from urban areas. Several villages in close proximity of planned site.

Very low population densities with widely distributed villages with little or no inhabitants in between.

Population density per sqkm >1,000 <1,000 <500Subscriber capacity 10,000 1,000 200

Subscriber voice MOU (outgoing) 50mins per month 50mins per month 50mins per monthSite voice traffic (max of outgoing,

incoming) 500,000mins per month 50,000mins per month 10,000mins per month

Mandatory radio technologies GU900 GU900 G900

Radio output power 10-15W 10W 10W

Coverage radius 15km 3km 1-3km

Coverage areas 707sqkm 28sqkm 3-28sqkm

Site capacity 2G/3G 2 TRX O2 upgradable to S222 and 2x U900 Carrier 2 TRX O2 upgradable to S222 and 1x U900 Carrier 1 TRX O2 upgradable to 2 TRX

Optional radio technologies L800, GL1800, UL2100 L800, GL1800 Vendor to propose

Site availability > =98% > =95% Best effort, vendor to propose

Dropped call rate <1% <5% <5%

Data throughput 2G/3G/4G Up to 1Mbps/3Mbps Up to 1Mbps/3Mbps EDGE, vendor to propose

Tower height 10-36m 10-20m Vendor to propose

Wind loading capacity 150km/h 150km/h 150km/h

Backhaul technology MW links MW or optimised VSAT Optimised VSAT

Site power Solar power with battery backup Solar power with battery backup Solar power with battery backup

Site autonomy 12-24 hours 12-24 hours Vendor to propose

Voda embracing towercos?

< Outside Tanzania Vodacom has eschewed SLBs< Vodafone TowerCo carve out (selected sales?) in Europe< Investing in over 3,000 rural sites with Facebook over 5 years< Working with AMN in DRC< ESCO RFP likely in DRC where a SLB may also be possible< If they win license in Ethiopia, likely to partner with towercos to rollout

Vodacom’s African footprint and history of tower sales

Sold to Helios Towers with 24.5% stake acquired in Helios Towers TanzaniaMLL with Eaton TowersVodafone retains towersVodacom retains towersSafaricom retains towersNo opco present

Ethiopia: Myanmar repeats itself, at 180% of scale?

< Market liberalisation has reached escape velocity < 49% of Ethio Telecom to be sold< Vodacom/Safaricom, MTN Group, Orange, Etisalat linked with two licences< IHS, Helios, ATC all with known interests; huge BTS opportunity< US$250mn telecom investment predicted for 2020

Ethiopia – TowerXchange central projections for cell site and power, year end


3,000 6,000 9,000 12,000 15,000

2019

2020

2021

2022

Ethio Tel ESCOs Towercos

6,500

7,000

7,250

7,300

1,750

2,000

3,000

4,500

1,500

1,500 1,000

2018 2019 2019 2019

2020 2020 2020

Telecom liberalisation

process begins

January: 85% 2G coverage

achieved

July: Independent

regulator formed

September: New licence process

expected to begin

Q1: Two new international

licences expected to be issued

Q1: Ethio Telecom

predicted to be 49% privatised

Q2: Network construction

begins

Airtel Africa’s footprint and tower transactions


123456

Airtel’s tower ownership and transactions across its 14 African markets

Sold to Eaton Towers

Sold to American Tower

Sold to Helios Towers

Sold to IHS

Retains towers, ESCO contract signed with Energy Vision

Currently retains towers

No opco present

Sold to Eaton Towers; opco subsequently acquired by Orange

Sold to Eaton, opco subsequently merged with Tigo

Airtel Africa’s post-IPO 5G ambition

Airtel African markets total base station locations

NigeriaEast Africa (Kenya, Uganda, Rwanda, Tanzania, Malawi, Zambia)Rest of Africa (Niger, Gabon, Chad, Congo Brazzaville, DRC, Madagascar, Seychelles)

11,729

15,551

5,221

< Asset-light, works with all four towercos< Retains towers in Chad, Gabon, Malawi, Madagascar, Tanzania and Seychelles< EOR for 1,400 towers in Tanzania< Airtel Africa has 4G live in all markets, 100% in Uganda, and in Niamey, Niger< Plans to have 5G live in three years, is the African telecom tower industry ready?

Orange pioneers the ESCO model

ESCO map< ESCO contracts up and running in Sierra-Leone and Guinea-Conakry, DRC, Niger, Burkina and Ivory Coast< ESCO contract closing in Central African Republic< ESCO RFPs live in Mali, Liberia and Cameroon with all of Orange’s African markets (except Egypt) due to have signed ESCOs by year end< Attention turning to rural programmes

Burkina Faso: Aktivco Côte d'Ivoire: Aktivco Chad: Aktivco DRC: GreenWish+Sagemcom Gabon: Energy Vision Niger: Activco Nigeria: IHS ‘Big Five’: IPT, Makasa Sun, M-P Infrastructure, Biswal Lebanon: IPT Sudan: Ascot Zimbabwe: Distributed Power Africa

Guinea Conakry: IPT with further RFP rumored


Country with confirmed live ESCO(s)ESCO RFP live or rumoured to be imminentConfirmed live ESCO(s) with further RFPs live or rumoredNo ESCO activity yet detected

New build projections for 2020

TowerXchange new site build forecast for SSA 2020, broken down by country


Ethiopia, 1,500

Nigeria, 1,000

Vodacom rural build with Facebook, 500

Other SSA countries, 392

MTN rural build outside named countries, 1,000

South Africa, 867

Kenya, 700

Senegal, 350

Ghana, 333

Madagascar, 150

Burkina Faso, 100

Uganda, 100

Mozambique, 100Tanzania, 80Cote d’Ivoire, 50

TowerXchange new site build forecast for SSA 2020-22

Count shows forecast new site build net of decommissioning< Cyclically slower year in 2019 but

predicted to pick up next year< Big growth contribution rural builds and Ethiopia’s liberalisation< Decommissioning in many markets mask higher gross volumes< Energy investment decisively shifting towards hybrid solutions, lithium-ion climbing toward 20% share, and even smaller towercos investing in tower management software

Ethiopia

Nigeria

South Africa

Kenya

Ghana

Other SSA countries

2020 2021 2022

12,000

10,000

8,000

6,000

4,000

2,000

MNOs vs towercos vs ESCOs

How is responsibility for power forecast to evolve across Sub-Saharan Africa’s 157,542 cell sites?

< Asset-light business models prevail< Outsourcing to towercos and ESCOs continues< Significant BTS, IBS and rural opportunities exist in many markets< Reduced prospect of game-changing large sale and leasebacks< Towercos ultimately own most of the SSA sites they want to own< Room for improvement in operational delivery Source: TowerXchange

Year end 2018 Year end 2019 Year end 2020

ESCOsTowercosMNOs

5 7 10

40 4149533956


R

Thank you!Kieron Osmotherly

Founder and CEOTowerXchange

E: [email protected]

M: +44 7771 148001

W. www.towerxchange.com

Matthew EdwardsHead of Research, EMEA

TowerXchangeE: [email protected]

M: +44 (0) 789 994 7585

W: www.towerxchange.com

welcome to the 7th towerxchange meetup africa · wi-fi network: towerxchange wi-fi password:...

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