Eaton Towers to build 250 towersComment on this story
Eaton Towers, which owns and manages telecom infrastructure in Africa, plans to build another 250 transmitter towers in 2013, increasing its portfolio by a sixth as growing internet use on the continent drives the London-based firm's expansion.
Eaton, one of a number of specialist players to launch services in Africa in recent years, will build about 100 towers in Uganda, 100 in South Africa and 50 in Ghana next year, Alan Harper, Eaton Towers' chief executive, told Reuters, raising the total number of towers it owns or manages to 1,750 from 1,500.
The company's customers include Vodafone, South Africa's MTN and India's Bharti Airtel, and it will make more acquisitions next year, Harper added.
“We still have a number of things we're working on in east and west Africa,” said Harper. “In the first half of 2013 we would be expecting to look at new business to open up in places where there's a strong economy, good GDP growth and more, rather than less, operators.”
Africa has the lowest internet usage in the world due to low wages, high subscription costs and a relative lack of infrastructure, but more people are getting online as smartphone prices fall and telecom operators improve their networks.
Internet use in sub-Saharan Africa will rise to 24.7 percent of the population by 2020 from 10.5 percent in 2010, according to Euromonitor International, to be the fastest growing region globally.
“There's still quite a lot of work going on with the major Africa operators - MTN, Orange, Vodafone, Etisalat - they are all looking at doing things with towers in different countries,” said Harper.
He said a lack of extensive fixed-line infrastructure in most African countries meant mobile networks would provide the main means for people to access the internet.
Yet building and maintaining mobile towers in Africa is typically more expensive than in other regions because of high security costs and a shortage of electricity that means towers are often powered by generators, while reaching rural areas can require new roads to be built.
Most African countries also offer only low revenues per user and competition is fierce among multiple operators, so many are increasingly looking at splitting costs, which they can do via bilateral tower-sharing deals. More popular is selling towers to specialist firms such as Eaton, which can then host multiple operators at the same site.
“When we look at a new market we're really trying to get under the skin of operators' plans to roll out things like 3G and LTE (long-term evolution, high-speed networks) to provide good data coverage and then understand what's the likely demand from the end user,” said Harper.
“Is the underlying economy strong enough to allow people to buy lower-cost smartphones or connect their laptops to the internet over the mobile network? That's what ultimately generates the traffic that causes operators to come to us and say 'I need to put up a new base station'.”
Capital International Private Equity Funds (CIPEF) is Eaton's majority shareholder, while London-based private equity group Development Partners International and Eaton's management team also owns stakes. - Reuters