SlideShare a Scribd company logo

TowerXchange-Issue_12

•
•
T
Toya Smith

The document summarizes recent tower industry developments and transactions in Latin America. It notes that 2015 will see further consolidation in Brazil as the major tower companies integrate recent acquisitions. In Mexico, America Movil is creating a tower company while AT&T's acquisitions will shake up the market. Peru and Central America are seeing growth from mid-sized tower companies, while regulatory issues have hindered development in Chile. The future of towers in Argentina remains uncertain due to economic and policy risks.

1 of 264
Download to read offline
Tower Xchange Tower Xchange Plus: TowerXchange ranks the world’s top 110 towercos by tower count ISSUE 12 | April 2015 | www.towerxchange.com Journal of the telecom tower industry in EMEA, CALA and Asia TowerXchange CALA: < Peru: the next towerco land grab? < How Telesites and AT&T transform Mexico < SBA’s Bagwell on international growth TowerXchange Africa: < Latest on Telkom and MTN’s towers in SA < Unlocking the potential of Mozambique < MENA heats up: Zain selling towers TowerXchange Europe: < NEW! Europe tower counts and deal history < The unique structure of the UK tower market < Russian tower market: SLB frozen, BTS hot! TowerXchange Asia: < India special: Indus, Viom and Infratel < The third phase of the Myanmar rollout < Who has the flex to buy next in Indonesia? “We’re on a mission of operator disarmament” – Akhil Gupta, Chairman, Bharti Infratel
www.towerxchange.com | TowerXchange Meetup | 11| TowerXchange Issue 12 | www.towerxchange.com2 (Chairman) Daniel Lee Managing Director Intrepid Advisory Partners Akhil Gupta Chairman Bharti Infratel Michel Faivre Directeur Programme Partage d’Infrastructure AMEA Orange Terry Rhodes Acting CEO Eaton Towers Marc Ganzi President, Digital Bridge & Mexico Tower Partners Arun Kapur Executive Chairman Irrawaddy Green Towers James Maclaurin formerly CEO edotco Areef Kassam Director of Infrastructure GSMA Mobile for Development Ayman Al Adl Director - TMT Standard Chartered Bank Chris Gabriel former CEO, Zain Africa Senior Adviser, Macquarie Group and Chairman, Clean Power Systems Chuck Green CEO Helios Towers Africa Suresh Sidhu CEO edotco Hal Hess EVP, International Operations and President, EMEA and Latin America American Tower Nobel Tanihaha President Director PT SOLUSI TUNAS PRATAMA (STP) Umang Das Chief Mentor Viom Networks Maria Scotti CEO Torrecom David Meganck Founder and COO Acsys Gary Staunton CEO Likusasa Group Laurentius Human Senior Director Corporate FInance Jabil Nina Triantis Managing Director, Global, Head of Telecoms & Media Standard Bank Kurt Bagwell President International SBA Communications Jim Eisenstein Chairman & CEO Grupo TorreSur Riana Donaldson Manager: International Network Operations Support Vodacom Bimal Dayal COO Indus Towers Inder Bajaj CEO Helios Towers Nigeria Tunde Titilayo Vice Chairman SWAP International Thorsten Schaefer CEO azeti Networks Jeffrey Eldredge Partner Vinson & Elkins Enda Hardiman Managing Partner Hardiman Telecommunications Ltd. Adeel Bajwa Senior GM of Legal Affairs and Contracts Warid Telecom With special thanks to the TowerXchange “Inner Circle” About TowerXchange TowerXchange is your independent community for operators, towercos, investors and suppliers interested in EMEA, CALA and Asian towers. We’re a community of practitioners formed to promote and accelerate infrastructure sharing. TowerXchange don’t build, operate or invest in towers; we’re a neutral community host and commentator on telecoms infrastructure. The TowerXchange Journal is free to qualifying recipients. We also provide webinars and regular meetups. TowerXchange monetizes this community through hosting annual Meetups and the sale of advertising, without compromising editorial integrity. TowerXchange was founded by Kieron Osmotherly, a TMT community host and events organizer with 16 years’ experience, and is governed with the support and advice of the TowerXchange “Inner Circle” – an informal network of advisors Our informal network of advisers: © 2015 Site Seven Media Ltd. All rights reserved. Neither the whole nor any substantial part of this publication may be re- produced, stored in a retrieval system, or transmitted by any means without the prior permission of Site Seven Media Ltd. Short extracts may be quoted if TowerXchange is cited as the source. TowerXchange is a trading name of Site Seven Media Ltd, registered in the UK. Company number 8293930.
Contents Regular features 5 CALA tower counts, deals and news 15 Africa tower counts, deals and news 31 Asia tower counts, deals and news 38 Europe tower counts, deals and news 45 AMT versus SBA (versus everyone else!) 52 Top 110 towercos by tower count 70 122 216 154 CALA: Peru, Brazil & Mexico Plus SBA and Innovattel interviews NEW! Europe: market overview UK and Russia case studies Who’s who: innovations in RMS, ESCOs, structures and supply chains Africa: South Africa, Nigeria, Mozambique and MENA 75 Towerco perspectives: SBA and Innovattel 84 Peru: the next towerco land-grab? 98 Unique perspectives on Brazil’s towers 110 Telesites and AT&T shake up Mexico 123 TowerXchange’s intro to European towers 128 Unique structure of the UK tower market 129 Arqiva: the broadcast and telecom synch 141 Russia: SLB frozen, BTS hot! 216 Our famous directory of RMS and ILM firms 228 Towerco or powerco? 250 Rooftops, masts and towers 175 Asia: India, Indonesia and Myanmar 180 India: Infratel, Indus and Viom interviews 196 Indonesia: a closer look at the STP-XL deal 202 Detecon’s guide to South Asian towers 206 The next phase of the Myanmar rollout 27 South African towers for sale? 155 BCTEK lease up Nigerian police network 158 Unlocking the potential of Mozambique 167 MENA heats up: Zain selling towers www.towerxchange.com | TowerXchange Issue 12 | 3| TowerXchange Issue 6 | www.towerxchange.com3 TowerXchange Meetup calendar < TowerXchange Meetup Americas, April 28-29, 2015 < TowerXchange Meetup Africa, October 1-2, 2015 < TowerXchange Meetup Asia, November 24-25, 2015 < TowerXchange Meetup Europe, Q1, 2016 < TowerXchange Meetup Americas, June 13-14, 2016
Africa’s leading, independent, telecom tower company HTA acquires, builds and manages wireless telecom infrastructure, leasing it to mobile network operators across Ghana, Tanzania and the Democratic Republic of Congo. HTA’s model of shared telecoms infrastructure, and its scale, helps to deliver improved efficiency and network quality and reliability for operators, reduced costs for users and increased accessibility. Find out more about our business www.heliostowersafrica.com
TowerXchange’s analysis of the independent tower market in CALA 2015: a year of consolidation in Brazil, restructuring in Mexico, regulatory turmoil in Chile, growth in Peru and Central America… And what of Argentina? Q1-3 2014 was relatively quiet for the CALA tower industry if compared to the wave of transactions that took place in 2013. But the Brazilian market swung back into life in Q4 with SBA securing another (the last?) tranche of towers from Oi, and AMT deploying over US$2bn to acquire a large portfolio from TIM and to absorb BR Towers, a portfolio previously acquired through sale and leasebacks (SLBs) with Vivo and Oi and supplemented by BTS. With the majority of operator-captive towers now transferred to towercos, America Movil’s Claro towers notwithstanding, 2015 will be a year of consolidation in Brazil. AMT and SBA will concentrate on the novation of leases, update of asset registers and integration of acquired assets, and the number three towerco GTS refocusing on their own organic growth and international plans after their sale process in 2014 did not attract any satisfactory offers. Further tower deals in Brazil are more likely to come from trade acquisitions, as middle market towercos mature and are acquired, than from SLBs. It will be interesting to see whether the Lei das Antenas has any noticeable effect in 2015 on the notoriously complex and time-consuming permitting regime in Brazil, unlocking huge pent-up demand for build to suit towers in the country. 2015 will be an interesting year for Mexico. In fact, not only we are paying close attention to America Movil’s creation of a carve-out towerco in response www.towerxchange.com | TowerXchange Issue 12 | 5| TowerXchange Issue 12 | www.towerxchange.comXX American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 Telesites 10,800 6,185 3,496 8,412 1,163 457 498 Dominican Republic American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 6,185 3,496 8,412 1,163 457 498 Dominican Republic 1000 800 600 400 200 Continental* Centennial Torres U nidas M exico Tow er Partners T4U N M S*** 400 860 550 540 350 465 146 300 180192200209250 175 130 5874 4051 40 86 93 350 65 110 220 1k 400 100 Q M C ** CSSTorrecom BrazilTow er Com pany IIM T Innovattel**** H ighline do Brasil Teletow er D om inicana Z Sites IntelliSite Solutions Rede Sul Tocsa Phoenix Tow er International Torre O nline Skysites Telecom Torres American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 Telesites 10,800 6,185 3,496 8,412 1,163 457 498 Dominican Republic American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 6,185 3,496 8,412 1,163 457 498 Dominican Republic 1000 800 600 400 200 nental* tennial U nidas Tow er tners T4U M S*** 400 860 550 540 350 465 146 300 180192200209250 175 130 5874 4051 40 86 93 350 65 110 220 1k 400 100 Q M C ** CSS rrecom lTow er pany IIM T ttel**** o Brasilletow ercana Z Sites elliSitetions ede Sul Tocsa Tow er ional O nline kysites Torres American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 Telesites 10,800 6,185 3,496 8,412 1,163 457 498 Dominican Republic American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 6,185 3,496 8,412 1,163 457 498 Dominican Republic 1000 800 600 400 200 Continental* Centennial Torres U nidas M exico Tow er Partners T4U N M S*** 400 860 550 540 350 465 146 300 180192200209250 175 130 5874 4051 40 86 93 350 65 110 220 1k 400 100 Q M C ** CSSTorrecom BrazilTow er Com pany IIM T Innovattel**** H ighline do Brasil Teletow er D om inicana Z Sites IntelliSite Solutions Rede Sul Tocsa Phoenix Tow er International Torre O nline Skysites Telecom Torres Estimated number of towers owned or managed by towercos in CALA Source: TowerXchange research, quarterly filings, site lists * Continental Towers owns a portfolio of ~1,000 towers across Colombia, Costa Rica, Panama, Nicaragua, Guatemala, El Salvador, Jamaica and Honduras ** QMC Telecom owns approximately 500 towers in Brazil, plus an unknown quantity in Mexico and Puerto Rico *** NMS owns 465 towers across Nicaragua, Mexico, Colombia and Peru **** Innovattel (Torresec) owns a portfolio of 209 towers across Puerto Rico, Colombia, Ecuador and Peru
empowering communication effectively cost-efficient energizing communities Empowering tomorrow’s connected world www.edotcogroup.com Connectivity is at the core of everything we do. Providing first-of-its-kind regional accessibility, our telecoms infrastructure reach enables us to touch communities and expand communication businesses across Southeast Asia. Enabling connectivity for the future
to regulatory pressure, but we are eager to track AT&T progresses now that it has acquired both Iusacell and Nextel Mexico. The U.S. giant will bring a breath of fresh air and capital to the country and definitely shake things up for Movistar, which could see its position as second Mexican carrier seriously threatened. In the meantime, all indications are that Telcel’s towers will be kept as close to the America Movil mothership as possible – Telcel has apparently transferred 10,800 towers to new towerco Telesites. Meanwhile, the rest of Mexico’s tower market resembles Brazil’s in that the majority of non- America Movil assets have been transferred to towercos, most the new build will be undertaken by towercos, and a growing layer of middle market towercos have entered the market – although few are mature enough to be subject to trade acquisitions as early as 2015. The Chilean tower market remains hindered by a regulatory regime that was supposed to help but certainly seems to be hindering the local tower industry and its investment in ICT infrastructure. Enterprising middle market towercos are making good progress in Peru and Central America, SBA Communications’ traditional stronghold. And what of Argentina? The ‘sleeping giant’ of the CALA tower industry is the region’s #2 mobile market, but remains sheathed in macro-economic turbulence and government policy that raises the spectre of nationalisation of assets. As such concerns gradually recede, expect the tower industry to heighten their ‘watching brief’ over Argentina in anticipation of www.towerxchange.com | TowerXchange Issue 12 | 7| TowerXchange Issue 12 | www.towerxchange.comXX Major tower transactions in Latin America 2011/2014 Date Q3 2013 Q4 2013 Q4 2013 Q4 2013 Q3 2014 Q4 2014 Q3 2013 Q2 2014 Q3 2013 Q2 2014 Q3 2013 Q2 2013 Q2 2013 Q3 2012 Q3 2012 Q1 2013 Q1 2013 Q4 2012 Q1 2013 Q4 2012 Q4 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q3 2011 Q2 2011 2011 Q1 2011 Seller Buyer Country USD/Tower Value in USDTower Sites Oi Oi Z-Sites Nextel American Tower TIM Nextel BR Towers* Nextel Oi SBA Communications SBA Communications American Tower American Tower Phoenix Tower Intl. American Tower American Tower American Tower American Tower SBA Communications Brazil Brazil Brazil Brazil Panama Brazil Brazil Brazil Mexico Brazil 343 million163 645 million 129 million 349 million N/A 1.2 billion 321 542 180 N/A 185 413 million 978 million 148 212 398 million 527 million 239 321 2,113 2,007 236 1,940 60 6,480 2,790 2,530+ 2,100 excl. rights 1,666 1,641 Global Tower Partners* Oi Oi American Tower Grupo TorreSur BR Towers US/Costa Rica Brazil Brazil 4.8 billion306 293 million138 251 million119 15,700 2,113 2,113 Telefonica Telefonica BR Towers American Tower Brazil Brazil 252 million 33 million 132 172 1,912 192 Axtel Telefonica American Tower American Tower Mexico Brazil 250 million 18 million 283 190 883 93 Telefonica Sitesharing Torres Unidas BR Towers Chile Brazil N/A N/A N/A N/A 400 100+250 BTS Telefonica SBA Communications Brazil 178 million223 800 Oi Grupo TorreSur Brazil 258 million214 1,208 Telefonica American Tower Brazil 225 million150 1,500 Telefonica Telefonica Telefonica Telefonica Millicom Telefonica Sitesharing American Tower American Tower American Tower American Tower American Tower Grupo TorreSur American Tower Chile Mexico Mexico Colombia Colombia Brazil Brazil 96 million 323 million 122 million 18 million 182 million 206 million 585 million 172 208 209 144 85 159 879 558 1,554 584 125 2,126 1,358 666 * company acquisition Special thanks to Jonathan Atkin, Managing Director at RBC Capital Markets for his contribution
www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com8 country risk dropping below the threshold required for tower investment, possibly as soon as 2016/17. There is plenty of capital flowing into CALA towers - the three major transactions of 2014, AMT-BR Towers, SBA-Oi and AMT-TIM, represented a total of US$2.7bn in deployed capital, compared to just under US$3bn spent in total over eleven transactions we reported in 2013 (not counting the AMT-GTP deal, which was US-centric). We may be entering a period where trade acquisitions will be as common as SLB deals, with several parties seeking assets in Brazil and Mexico. The premium paid for a buy and leaseback from a CALA carrier shows no sign of abating, average cost per tower having risen from US$128k in 2010, US$148k per tower in 2011, US$169k in 2012, US$188k in 2013 and US$213k per tower in 2014. It is also notable that trade acquisitions come at an even higher premium, which makes sense given that the towers concerned are typically newer, have more wind load  capacity, and their lease agreements more suited to co-location. The fact that Brazilian towers are almost “sold out” suggests attention may be diverted to trade acquisitions or diverted outside Brazil for towercos seeking to extend their growth narrative. TowerXchange is currently tracking potential new market entrants in Colombia, Chile and Peru, especially since SBA Communications has hinted at new markets being on their radar. Although unsure of what SBA’s next move will be, we are confident the U.S. giant will pick among these three countries LatAm towerco breakdown by country AMT Costa Rica Peru Chile Brazil Mexico Colombia Andinas Ecuador Peru Chile Colombia Brazil Continental Guatemala El Salvador Jamaica Honduras Nicaragua Panama Costa Rica Colombia Colombia Colombia Colombia Colombia Colombia Innovattel Ecuador Puerto Rico Puerto Rico Peru QMC Brazil Mexico SBA Guatemala Guatemala El Salvador Nicaragua Nicaragua Nicaragua Panama Panama Panama Costa Rica Costa Rica Costa Rica Brazil Brazil Brazil Torrecom Mexico Mexico Mexico Torres Unidas Phoenix Tower Int. Centennial NMS Peru Peru Chile Towercos focusing on a single country Brazil: GTS, Highline, CSS, T4U, Skysites, Telecom Torres, Z Sites, Rede Sul, Torre Online Mexico: MTP, IIMT, Intelli Site Solutions, Telesites Panama: Torres de Panama Dom. Rep: Teletower Dominicana Costa Rica: Catalina Inc., Tocsa
800.487.SITE sbasite.com © 2015 SBA Communications Corporation. All Rights Reserved. The SBA logo, Your Signal Starts Here, Building Better Wireless and SBA Sites are all registered trademarks owned by SBA Telecommunications, Inc. and affiliated SBA companies. Our clients depend on SBA to provide the wireless infrastructure that allows them to transmit the signal to their customers. As their first choice provider of wireless infrastructure solutions, we are continuously setting the standard for customer satisfaction by “Building Better Wireless”. IN OUR BUSINESS, IT IS ALL ABOUT THE SIGNAL. FLORIDA HEADQUARTERED. INTERNATIONALLY CONNECTED. TOWER OWNERSHIP LEASING SITE MANAGEMENT SITE DEVELOPMENT CONSTRUCTION
which, as of now, have the best growth potential in the region, outside of Brazil and Mexico. In the meantime, we have speculated on potential market openings in Argentina, especially since Nextel is likely to be sold over the next few weeks. To date, the two likely buyers appear to be private equity firms Optimum Capital and Kingsley Capital but there could be other likely acquirers lined up for the troubled carrier. Argentina is a troubled country with a risky outlook and an entry into its telecom industry will surely require bold entrepreneurship and a flair for challenges. On the towerco side, we could expect middle market, independent towercos to initiate a market opening process but we doubt organisations such as AMT and SBA will comfortably navigate those waters anytime soon. In conclusion, the CALA region remains a very diverse region, as clearly shown in the heatmap TowerXchange created. Countries like Bolivia, Venezuela and Paraguay have seen very little or zero towerco activity and we will keep a very close eye and report on any movement towards the creation of new regional towerco markets www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com10 Latin America Heatmap 16 different CALA towercos have already confirmed their participation in the 2nd Annual TowerXchange Meetup Americas, taking place in Hollywood, FL, 28-29 April 2015, in co-location with PCIA’s Wireless Infrastructure Show. Contact me for further information at: aneri@towerxchange.com Towercos have acquired the majority of towers from carriers Towercos have acquired a significant proportion of towers from carriers, but the majority remain carrier-owned. Significant BTS towerco activity also present Less SLB activity, but plenty of BTS towerco activity Early stage market for BTS and/or SLB Negligible towerco activity Legend Source: TowerXchange
América Móvil creates Telesites On April 1, América Móvil has filed a report with the plan for the creation of its spin off towerco Telesites, to which it will transfer 10,800 towers. Industry news suggest that other Mexican carriers will have access to 91% of the country’s sites, compared to the current 45%. Telcel will of course be the anchor tenant. The restructuring plan is expected to be approved at the company’s shareholders meeting scheduled for April 17 and the spin-off should be concluded before the end of June 2015. Digicel on the new Bahamian network Frank O’Carroll, Digicel’s Head of Business Development, has recently stated that the six-month deadline set by the Bahamian government to rollout and launch network services was tough to achieve. Another requirement set by the government refers to the wide ownership, according to which new operators must be majority Bahamian-owned. In the meantime, Digicel is planning to build between 200-300 new towers and invest approximately US$200mn for the new network. Second Bahamian operator to be partially State-owned In recent news, Telegeography reported that the new licensee, called NewCo, is 51% owned by the government and it will retain equity until a sale to private Bahamian investors can be organised. The Chairman of the opposition party FNM Michael Pintard stated that “It is conceivable that the government, [which] has a huge stake in the present telecommunications company and…will be the majority shareholder in the new company, can fix prices and disadvantage the consumer…It opens the doors for any number of backdoor deals and the government ought to ensure there is transparency in this entire process.” Claro Honduras launches 4G LTE The Comision Nacional de Telecomunicaciones (Conatel) has celebrated the launch of the second 4G LTE network by Claro Honduras. The new network will be available in large cities such as Tegucigalpa, San Pedro Sula and La Ceiba. According to license conditions, the coverage is expected to reach fourteen cities in 2016. www.towerxchange.com | TowerXchange Issue 12 | 11| TowerXchange Issue 12 | www.towerxchange.comXX Telefonica not entering Honduras, Paraguay or Bolivia In a recent conference call with investors, Telefonica’s CEO Cesar Alierta has denied any interest in entering new LatAm markets. The CEO stated that Telefonica is not entering Honduras, Paraguay or Bolivia and that the current focus is on growing the company’s presence in existing markets. Nokia involved in VoLTE and small cell for Avantel Avantel has appointed Nokia Solutions to develop VoLTE services with initial rollouts expected in Bogota, Medellin, Cali, Barranquilla and Bucaramanga. Nokia has also developed Avantel’s Flexi Zone LTE small cell solution which is considerably improving the operator’s capacity and coverage. Une-EPM/Tigo expanding LTE footprint Une-EPM and Tigo Colombia, which merged a few months ago, have reached LTE coverage of 75 cities in Colombia. According to a recent statement by the CEO, Esteban Iriarte “In 2014 we invested in the improvement, modernisation and expansion of our fixed and mobile telecoms infrastructure … we deployed more than 2,800km of fibre and expanded the capacity of our submarine cables and national transport network.” Mexico Bahamas Bahamas Honduras CALA news A roundup of tower news across Central and Latin America Honduras Colombia Colombia
appealing the decision, according to national news. US$1.16bn to be invested in fibre-optic The Minister of Transport and Communications, Mr José Gallardo Ku, recently stated that over five million citizens will benefit from the fibre-optic project currently being developed, which will reach 6,411 locations thanks to 31,716km of fibre. Twenty-one tenders are scheduled over the next two years with an estimated investment of US$1.16bn. Claro expands footprint to rural areas Claro is extending its 3G footprint to 181 remote areas in Chile, reaching out to as many as 46,880 people. The move is complying with the minimum requirements set in the LTE license granted to the operator. According to Claro’s General Manager, Mr Mauricio Escobedo, the company is now embarking “on a new phase with the delivery of voice services in rural locations throughout Chile.” PT transfers millions of Oi shares to new entity Portugal Telecom SGPS has recently transferred 47.435 million common shares and 94.87 million preferred shares issued by Oi to a company registered in the Netherlands under the name of Portugal Telecom International Finance BV. The transfer was approved by the Board of Directors in March and Oi has released a statement announcing that “PT Finance is an indirect wholly owned subsidiary of Oi and, therefore, the shares transferred by PT SGPS to PT Finance will Telefonica de-values its Venezuelan assets Telefonica is writing down the value of its Venezuelan assets in light of the crisis of the Bolivar Fuerte, the national currency. Profits will be written down for as much as €1.23bn. The assets include considerable profit that the national government isn’t allowing Telefonica to take out of Venezuela, as reported by the Wall Street Journal. Movistar to invest in 4G LTE Movistar Ecuador will invest as much as US$150mn to deploy 3G infrastructure as well as its 4G LTE network. The company has recently been awarded extra spectrum which includes frequencies in the 1,900MHz band. New regulator starts acting Ecuador has a new telecom regulator which was formed earlier this year, the Agency for Regulation & Control of Telecommunications (Arcotel). Arcotel will combine functions of various existing regulatory bodies and will operate in cooperation with the Ministry of Telecommunications & Information Society. The Agency is responsible for managing, regulating and controlling telecoms and radio spectrum in Ecuador. Movistar Peru ordered to pay past taxes Movistar Peru has been ordered to pay US$500.9mn to SUNAT, the national tributary agency, in taxes dated 2000-2001. The operator is looking at www.towerxchange.com | TowerXchange Issue 12 | 13| TowerXchange Issue 12 | www.towerxchange.comXX be considered, as the case may be, treasury shares.” Vivo plans public share offering After receiving approval to acquire Global Village Telecom (GVT), Vivo is planning to hold a public share offering which will help finance the deal. Telefonica has recently purchased GVT for US$9.83bn and, as requested by Anatel as a condition to approve the acquisition, has waived its voting rights linked to its stake in Telecom Italia. Telegeography recently reported that Telefonica has lined up nine banks to run its US$3.25bn capital increase. The institutions involved in the deal are UBS, Morgan Stanley, JP Morgan, Bank of America Merrill Lynch, Barclays, HSBC, BBVA, CaixaBank and Santander. Oi and TIM to share 2G/3G network A 2G and 3G network sharing agreement between Oi and TIM Brasil has been approved by the Brazilian regulatory authority Conselho Administrativo de Defesa Economica (CADE). The deal will allow the operators to share networks in areas with population of less than 30,000 people. NII Holdings agrees to sell Nextel Argentina Private equity firms Kingsley Capital and Optimum Capital have reportedly reached an agreement with NII Holdings for the acquisition of Nextel Argentina. Details of the deal are yet to be announced Chile Ecuador Ecuador Venezuela Peru Brazil Brazil Brazil Peru Argentina
TowerXchange’s analysis of the independent tower market in Africa African towers 2015: deal flow slowing but some significant assets still to be acquired www.towerxchange.com | TowerXchange Issue 12 | 15| TowerXchange Issue 12 | www.towerxchange.comXX 2014 concluded with independent towercos owning close to 30% (or 47,600) of Africa’s towers. In 2015 the rate of asset transfer will slow but there are still some significant deals to be done across the continent. We anticipate that the balance of the Airtel assets (a further 2,000 towers) will be sold in early 2015. Our research suggests the transactions are pending regulatory approval only, with announcements imminent involving the transfer of Airtel’s towers in Gabon to Helios Towers Africa Figure 1: Estimated number of towers owned or managed by towercos in Africa and in Madagascar to Eaton Towers. Airtel are set to retain their towers in Sierra Leone. In further deals, we anticipate the sale of MobiNil’s ~3,500 towers in Egypt to take place in H1 2015, with Eaton Towers believed to be the successful bidder in the process. Processes involving Sonotel’s assets in Senegal, Mali and the Guineas are also underway and expected to complete in Q4 2015-Q2 2016. Furthermore, Telkom’s RFP for the sale of ~6,000 shareable structures (including around 3,500 GBTs) in South Africa has sparked rumours that MTN’s assets in the country will also come to market in 2015, which could see a further ­~10,000 towers, representing 60% of the tower stock in the South African market, transferring to towerco ownership in the next 12 months. With these new sales, the Airtel deal triggering follow-on deals, and with towercos growing 10-15% per annum organically by building the majority of the continent’s new towers, we’re sticking to our forecast that towercos will own 46.9% of Africa’s towers by year end 2015. That will represent the vast majority of the towers owned by credit worthy anchor tenants – the addressable market for towercos in Africa may be 55-60%. The size of Africa’s tower industry doubled in two quarters, triggered by Airtel’s sale of towers in 16 of their 17 African countries (sales of 4,800 towers to American Tower, 3,500 to Eaton, 3,100 to Helios Towers Africa and 1,113 to IHS have been announced to date). The sale of Airtel’s Nigerian Towers, recently secured by American Tower, stimulated two other deals in Africa’s most lucrative mobile market, both of which were closed before the Airtel deal; Etisalat Nigeria sold 2,136 of their ~2,700 towers to IHS, while MTN sold all 9,151 of their Nigerian towers to the same counterparty, retaining a 51% stake in the joint venture. Almost US$5bn of PE-backed towerco’s investors and American Tower’s money is now at work in the African tower sector, not including substantial Source: TowerXchange IHS Africa 5000 10000 15000 20000 25000 Helios Towers Africa American Tower Eaton Towers SWAP Technologies Helios Towers Nigeria 1900 1500 1400 1600 700 509 250 1300 170 800 500 400 500 500 500 4500 300 200 2038 1918 1256 2230 734 1648 38014222 4800 South Africa Nigeria Ghana Burkina Faso DRC Cote d’Ivoire Cameroon Niger Rwanda Zambia Congo B Chad Unknown Country Uganda Tanzania Malawi
When it comes to telecoms experience, we’re at the top. For over 20 years, we’ve designed, supplied and installed thousands of telecom structures around the world, and we can do the same for you – and more. We can also help you cool your equipment room while helping you cut energy costs with our Monitor free-cooling system. Contact us today to see what we can do for you. www.alifabs.com +44 (0)1653 602890 +44 (0)1483 611999
infrastructure sharing) < Square1 Infrastructure (Nigeria and South Africa) < TASC (targeting MENA) < TowerCo of Madagascar < Tower share (targeting MENA) www.towerxchange.com | TowerXchange Issue 12 | 17| TowerXchange Issue 12 | www.towerxchange.comXX Source: TowerXchange Source: TowerXchange equity stakes retained by MTN, Millicom and Vodacom. Sub-Saharan Africa has graduated to a new class of investor, and the price of participation in this maturing asset class is now likely well over US$100mn. Many commentators feel the three PE-backed members of Africa’s ‘Big Four’ towercos have now achieved the necessary diversification of country and counterparty risk to commence the final phase of integration and consolidation in the run up to trade sale or IPO. While a glance at Africa’s tier one MNO’s remaining tower portfolios suggest a finite amount of investible assets remain operator-captive (see “What’s left?” In issue 11 of TowerXchange), TowerXchange forecast that the Airtel deal will trigger a handful of follow-on deals in 2015 Figure 1a: Count differentiating towers that are owned from those that are managed and marketed by towercos Unfilled bars = Managed and marketed towers Filled bars = Owned Towers Figure 2: Africa's regional and prospective new entrant towercos TowerXchange are tracking several towercos who are active in or targeting Africa (there are a couple more, but we’re not at liberty to disclose them!): < Atlas Towers (South Africa) < BCTEK (Nigeria) < Communication Towers Nigeria < Frontier Tower Solutions (targeting Burundi) < Hotspot Network Limited (Nigeria) < Infratel (South Africa) < Pro High Site Communication (South Africa) < Shared Networks Tanzania (active TowerXchange estimate that these towercos own or operate a total of around 2,000 African towers. 19000 2000 700 5000 10000 15000 20000 25000 700 759 800 700 7800 10012 4370 “ “ the three PE-backed members of Africa’s ‘Big Four’ towercos have now achieved the necessary diversification  of country and counterparty risk to commence the final phase of integration and run up to trade sale or IPO
eManager by Flexenclosure Operation Property Site logistics Engineering Local server Dew Point 0.1 Normal Local Server Humidity 22.8 Low Local Server Pressure 991.8 Rather Low Local Server Humidity 23.1 Low Local Server Temperature 21.6 Rather low Local Server Temperature 22 Low Local Server CPU 1 Load 43 High Local Server CPU 2 Load 40 Moderate Local Server Physical Memory 31815 Info=Job execution started Information Discover and Connect Info Info=Device is online Information Local Server (SNMP) Notice Status=21, Comment=Online Status Changed Local Server (SNMP) Notice Info=Device is offline Information Local Server (SNMP) Notice Status=20, Comment=Offline Status Changed Local Server (SNMP) Notice Info=Disconnection detected Information Local Server (SNMP) Warning Temperature 21.8 Humidity 24.4 Computed value 0.6 Temperature Limit low -200.0 Temperature Limit High 300.0 Humidity Limit Low 5.0 Humidity Limit High 100.0 Computed Value Limit Low -50.0 Computed Value Limit High 80.0 Temperature alarm delay 20 Humidity alarm delay 30 Computed value alarm delay 30 Temperature hysteresis 1.0 Humidity hysteresis 1.0 Computed value hysteresis 0.1 Temperature *10 218 Data Event Level Network Overview 0.25 20.00 00.00 04.00 08.00 12.00 16.00 0.50 0.75 1.00 1.25 1.50 Business Control 0.25 20.00 00.00 04.00 08.00 12.00 16.00 0.50 0.75 1.00 1.25 1.50 d Connect Info rver (SNMP) Notice Serverrver (SNMP) Notice al Server (SNMP)MP) Notice ocal Server (SNMP) Notice LoLocal Server (SNMP) Warning L lLevelvel 00.00 04.00 08.0008.00 12.00 16.00 in
www.towerxchange.com | TowerXchange Issue 12 | 19| TowerXchange Issue 12 | www.towerxchange.comXX Jan-2010 Millicom / Tigo Ghana HTA 750 $54mn for 60% Joint venture$120k $307k* $228k Oct-2010 Feb-2010 Vodafone Multilinks Ghana Nigeria Eaton HTN 750 400 Not applicable Unknown Manage with license to lease Manage with license to lease Dec-2010 Cell C South Africa American 1,400* $430mn Sale and leaseback Dec-2010 Starcomms Nigeria SWAP 407 $81m Sale and leaseback Dec-2010 MTN Ghana American 1,876 $218.5mn for 51% Joint venture Dec-2010 Dec-2010 Millicom / Tigo Millicom / Tigo Tanzania DRC HTA HTA 1,020 729 $80m for 60%** $45mn for 60%** Joint venture Joint venture$103k $131k Dec-2011 Aug-2010 MTN Visafone Uganda Nigeria American IHS 1,000 800 $89m for 51% $67mn Joint venture Sale and leaseback $175k $84k Mar-2012 Orange Uganda Eaton 300 Unknown Sale and leaseback Mar-2012 Apr-2013 Warid Telecom Orange Uganda Cameroon & Cote d’Ivoire Eaton IHS Africa 400 2,000 Unknown N/A Sale and leaseback Manage with license to lease Oct-2012 MTN Cameroon IHS Africa 827 $143m Sale and leaseback$173k Oct-2012 Jul-2013 Jun-2013 Jul-2014 Sep-2014 Dec-2014 May-2014 Aug-2014 Sep-2014 Nov-2014 MTN Vodacom Telkom Kenya*** Airtel MTN Airtel MTN Etisalat Airtel Airtel Cote d’Ivoire Tanzania Kenya Tanzania, DRC, Congo B & Chad tbc Nigeria Zambia & Rwanda Rwanda & Zambia Nigeria Ghana, Niger, Burkina Faso, Kenya, Uganda & Malawi tbc Nigeria IHS Africa HTA Eaton HTA IHS Africa IHS IHS IHS Eaton American 931 1,149 1,000 3,100 9,151 1,113 2,136 3,500 4,800 1,269 $141m ~$75mn for 75.5% N/A ~$400-500mn $882mn for 49% ~US$181mn Unknown $470-500mn ~$525-700mn $1,050mn Sale and leaseback$151k Joint venture Manage with license to lease $65k Sale and leaseback$145k $227k Joint Venture Sale and leaseback $197k $163k Sale and leaseback Sale and leaseback Sale and leaseback Sale and leaseback $175k $219k *Cell C deal included 1,400 existing towers plus 1,800 towers to be constructed **Millicom/Tigo’s stake in Helios Towers Tanzania reduced to 24.5% after Helios acquired towers from Vodacom Tanzania in 2013 ***Telkom Kenya-Eaton deal subsequently cancelled Figure 3: Africa’s biggest tower sharing transactions to date Year Operator Country TowerCo Est. # of towers Publicly stated purchase price Deal structureCost per tower Source: TowerXchange $199k Figure 4: African tower industry achieves launch velocity End of Year Est total # of towers in Africa Est # of African towers owned or operated by towercos % of African towers owned by towercos 2009 120,000 100 0.001% 2010 125,000 6,000 4.7% 2011 130,000 9,000 6.9% 2012 140,000 16,661 11.9% 2013 150,000 *25,510 17% 2014 165,000 47,500 29% 2015(f) 180,000 84,500 46.9%
LEBANON ALGERIA DR CONGO MYANMAR BURKINA FASO ETHIOPIA RWANDA CONGO CAMEROON GHANA UGANDA SOUTH SUDAN Fiber Optics MV,HV& E HV Network Manage d Services NetworkD eployment SERVICES A leading provider of infrastructure solutions global picture. local insights info@ieng-group.com | www.ieng-group.com Quality ISO 9001 Health & Safety OHSAS 18001EMPLOYEES 700 ISOCERTIFIED SITES UNDER MANAGEMENT 3008 Design, Engineering & Construction Mast & Tower Solutions Network Equipment Installation Commissioning & Swap-out Power Supply Site Planning, Acquisition & Property Services Testing & Commissioning Procurement, Logistics & Warehouse Management Operations & Maintenance Telecommunications and Power Services
Source: TowerXchange Cameroon Cote d’Ivoire Rwanda Zambia Tanzania Chad Congo Brazzaville DRC Kenya Niger Burkina Faso Malawi South Africa Uganda Ghana Nigeria IHS American Tower Helios Towers Africa Eaton Towers HTN & SWAP www.towerxchange.com | TowerXchange Issue 12 | 21| TowerXchange Issue 12 | www.towerxchange.com20 Figure 5: Forecast African towerco footprints Please feel free to contact the TowerXchange team Kieron Osmotherly Founder & CEO E: kosmotherly@towerxchange.com M: +44 7771 148001 For editorial & speaking enquiries regarding Americas: Arianna Neri Head of Americas & Asia E: aneri@towerxchange.com M: +39 338 111 2103 For editorial & speaking enquiries regarding Africa or Europe: Frances Rose Head of EMEA E: frose@towerxchange.com M: +44 7793 045718 For editorial & speaking enquiries regarding Asia: Ian Ferguson Head of Asia E: iferguson@towerxchange.com M: +44 (0)7908175087 For advertising opportunities & event participation: Annabelle mayhew Chief Commercial Officer E: amayhew@towerxchange.com M: +44 7423 512588 Toya Smith Business Development Manager E: tsmith@towerxchange.com M: +44 7967 441110 For media partnerships & to request additional subscriptions: Harpreet Sohanpal Head of Marketing E: hsonanpal@towerxchange.com For the designers of the TowerXchange Journal & brand: Jon Whitty Senior Designer & Brand Development E: jon@blacklightdesign.co.uk The TowerXchange Journal is published by Site Seven Media Ltd. © 2014 Site Seven Media Ltd. All rights reserved. Neither the whole nor any substantial part of this publication may be re-produced, stored in a retrieval system, or transmitted by any means without the prior permission of Site Seven Media Ltd. Short extracts may be quoted if TowerXchange is cited as the source. TowerXchange is a trading name of Site Seven Media Ltd, registered in the UK. Company number 8293930.
Vertical Anchorage Line System www.karam.in customercare@karam.inE-mail ID : SAFE ANCHORAGE SOLUTIONPROVIDING SAFE ANCHORAGE SOLUTION FOR HEIGHT SAFETY IN TELECOM INDUSTRY Ref. VERTEX PN 8000 Vertical Anchorage Line System on Rigid Aluminium Rail Ref. VERTEX PN 7000 Vertical Anchorage Line System on Rigid Cable Line Ref. VERTEX PN 9000 Vertical Anchorage Line System on Rigid Aluminium Rail
Botswana – Vodafone Group and Botswana Telecommunications Corporation Limited (BTC) have signed a new Partner Market agreement. The agreement will allow BTC to access Vodafone’s global data reach and offer customers a competitive cost base and Vodafone will be given access to BTC’s extensive local network. Ghana – MTN Ghana has unveiled plans to invest GHS460 million (US$122 million) in network improvement work in 2015, following infrastructure investments of GHS311 million in 2014. MTN Ghana has deployed an additional 112 3G BTS in the last few months. MTN’s tower network in Ghana is managed by a joint venture tower company with American Tower. Cameroon – State-owned operator CamTel is preparing to deploy a mobile communications network after being awarded a wireless license in September 2014. In addition MTN and Orange Cameroon have received permission to launch 3G and 4G services which will open up competition with Viettel Cameroon’s high speed data offering. Zimbabwe – As the row over infrastructure sharing, particularly in relation to market leader Econet’s network continues, the government’s latest plan is to create an entity to take control of the country’s telecoms infrastructure. www.towerxchange.com | TowerXchange Issue 12 | 23| TowerXchange Issue 12 | www.towerxchange.com22 Their aim is to see one independent company setting up infrastructure to end any debates about ownership and to promote competition on service levels rather than network coverage. Senegal – Ericsson has signed a contract with Tigo Senegal to manage and maintain Tigo’s network and technical capabilities. Although Ericsson will take over responsibility for operational management, Tigo will retain control over strategic issues such as ownership of equipment, network development and investment strategy. Nigeria, Ghana and Uganda – A changing of the guard at American Tower in Africa will see Francois Van Zyl moving from Cell C to become CEO of ATC Ghana. Thomas Sonesson will move from Ghana to take over as CEO of ATC Uganda as the previous Ugandan CEO Gordon Porter will head up the new ATC Nigeria. South Africa – Cell C has announced a planned investment of ZAR8 billion (UD$667.2 million) to fund LTE roll-out in targeted areas in South Africa over the next three years. The strategy will be to target highly populated metropolitan areas. Huawei and ZTE have been engaged as primary partners in the rollout which will cover some 4,000 sites. Africa News South Africa – More detail is emerging of the Telkom tower sale process, incorrectly rumoured to have been discontinued in one media outlet. It seems Telkom only wants to sell a small proportion of their macro towers, while they are seeking that the same counterpart manage the balance of their tower assets. South Africa/Africa – TowerXchange believes that Vodacom Group would be open to sharing network infrastructure with competitors Millicom and Bharti Airtel, in order to reduce costs related to O&M as well as for future network deployments. This represents a new way of approaching infrastructure sharing in Africa, where the towerco-led ‘Sale and Leaseback’ model is more prevalent. This plan would see Bharti Airtel, Millicom and Vodacom sharing infrastructure in the markets they have in common, such as Tanzania and DRC. Zambia – Huawei has won a contract to build new telecom infrastructure in Zambia, as part of a US$65 million initiative to increase connectivity. The towers will be used by all three Zambian mobile operators and will be overseen by the Zambia Information and Communication Technology Authority (ZICTA), the country’s telecom regulator. Nigeria – RIHS has been licensed by the Nigerian Communications Commission (NCC) to improve broadband services in the northern central states of the country. According to rumours, IHS will focus on urban areas in this
region, where there is currently no broadband provision and very limited mobile internet Mali – The government is said to be considering the possibility of tendering for a fourth mobile operator later in 2015. While Alpha Telecom has begun to deploy infrastructure they have hit many roadblocks, to the point where in November 2014 it was revealed that a prosecutor for the Ministre de l’Economie et des Finances had begun an investigation into their license. This delay has led the government to investigate the possibility of issuing a further concession to another company once the block on licensing lifts later this year. Africa – Rumours in TMTfinance that IHS is already gearing up for an IPO are premature. All three private equity backed African towercos, Helios Towers Africa, Eaton Towers and IHS, will ideally need two to three years’ trading history at scale before having a realistic option to list. 2015 and 2016 will be about integrating and consolidating their acquisitions, IPOs or trade sales are unlikely to occur until 2017 given the time lapse between announcing and closing deals www.towerxchange.com | TowerXchange Issue 12 | 25| TowerXchange Issue 12 | www.towerxchange.comXX Tower Xchange Meetup Africa 2015 1-2 October, Johannesburg IHS reports 130% EBITDA growth in FY2014 Annual report of lead investors Wendel Group reveals key financial metrics of IHS's meteoric rise IHS’s recent acquisitions in Rwanda, Zambia and Nigeria have launched the company into the top ten biggest towercos globally. Now managing in excess of 23,000 towers across Africa (pro forma with the acquisition of MTN’s Nigerian towers), the company has grown by 130% (both in terms of EBITDA and number of towers under management) over the last year and has increased the number of towers under management fourfold over the last two years. In 2014 IHS acquired more than 13,000 towers of which 8,000 have already been integrated. This includes 1,300 towers from MTN in Rwanda and Zambia (consolidated in April and May 2014), 2,100 towers from Etisalat Nigeria (consolidated in November 2014), 9,100 towers from NTN in Nigeria (of which 4,150 were consolidated in December 2014 and the remainder will be consolidated in H1 2015), resulting in revenue almost doubling to $312.4 million before pass-through of diesel costs to tenants. IHS was successful in increasing the rate of co-location on existing sites and reducing energy costs and is partnering with key MNOs to improve lease up rate, resulting in EBITDA advancing to $100.8mn in 2014, representing a margin of 32.3%. The acquisition of towers from MTN in Zambia and Rwanda and the Nigerian tower acquisitions were financed by a capital raises including US$550 million in March and April 2014, a premium of 30% on the previous capital raise in July 2013. Then in November 2014 IHS announced it was raising a further US$2.6 billion to support this growth, including US$600 million in the form of a credit facility and US$800 million credit to fund the IHS/MTN joint venture in Nigeria. The debt component of US$600 million was fully under-written and is split between USD and Naira and has a seven year tranche and an eight year tranche. Of this tranche of funds, lead shareholder Wendel has committed to investing an additional US$503 million in additional equity, bringing its total investment in IHS Holding to US$779 million. In addition Wendel has brought together four US and European family investors (including FFP, Sofina and Luxempart) to co-invest in IHS, meaning that Wendel has raised an additional US$181 million through an IHS co-investment vehicle managed by Wendel. Once these two tranches of investment are complete, Wendel will own c. 26% of the share capital directly and will represent 36% of the voting rights. IHS also attracted additional first tier investors in 2014 including the sovereign wealth funds of Singapore and South Korea (GIC and KIC), AIIM (Macquarie and Old Mutual) and Goldman Sachs. IHS has now raised a total of US$4.5 billion since 2012 and has deployed the funds in establishing market- leading positions in Nigeria, Cameroon, The Ivory Coast, Zambia and Rwanda. In addition to IHS’s most recent acquisitions in Rwanda, Zambia and Nigeria, they are also planning new site build programmes across the IHS footprint and to invest in greener, more sustainable power solutions across their portfolio
Your safety is our mission The industry leader in tower climber safety The industry leader in tower climber safety National Association of Tower Erectors 605-882-5865 • 888-882-5865 (U.S.) www.natehome.com 605-882-5865 • 888-882-5865 (U.S.)
Last of the SSA land-grab; reigniting competition for South Africa’s towers Following Telkom’s RFP, MTN are rumoured to be again considering bringing their towers to market. Who will succeed in securing Africa’s most profitable market? The South African towerco market Towercos own just 10% of South Africa’s estimated 22,288 telecom towers, making the country the least penetrated of SSAs attractive tower markets. To date two of Africa’s ‘Big Four’ towercos control assets in the country – Eaton Towers has built over 170 towers with a pipeline of several hundred more and a tenancy ratio north of two, and American Tower markets 1,918 towers, 1,400 of which were acquired from Cell C back in 2010 in a US$430mn deal which at the time was reported to include up to 1,800 towers to be constructed, the majority of which have evidently not been built. In addition several ‘middle market’ towercos operate in the South Africa including Square1 Infrastructure and Atlas Tower. The South African market is one of the most attractive telecom markets in SSA with 148% SIM penetration, of which 35% are 3G and 4G (source: GSMA Intelligence, Q4 2014) and, given wireline penetration stands at just 9%, growth in data consumption is likely to occur mainly in the mobile market. ARPU is around US$8. South African operator landscape Vodacom is the leading operator in South Africa with 31.5mn subscribers, supported by around 7,000 towers across the country. Leading the market in South Africa for many years, their market share has remained fairly stable despite shake ups from new market entrants. Vodacom denied interest in selling their South African towers as recently Read this article to learn: < The current status of the South African operator market < Which towers will be involved in a potential divestment < Imperatives and drivers in the South African market < How tower assets are currently distributed in South Africa Now that Telkom have issued an RFP for the sale of some of their 6,000 shareable structures and MTN are rumoured to be considering bringing their passive infrastructure assets to market in late 2015, it seems likely that a substantial opportunity is about to open up in Africa’s most investible tower market. TowerXchange reviews the telecoms and tower landscape and looks at who is likely to make a play for South African towers. Keywords: Editorial, MNOs, Southern Africa, South Africa, Telkom, MTN, Cell C, Vodacom, Eaton Towers, American Tower, Acquisition, Market Overview, Valuation, Investment, 3G, 4G, LTE, EBITDA, New License, Capex, Transfer Assets, Co-locations, Infrastructure Sharing, ARPU, Anchor Tenant, On-Grid, Operator-Led JV, Sale & Leaseback www.towerxchange.com | TowerXchange Issue 12 | 27| TowerXchange Issue 12 | www.towerxchange.comXX By Frances Rose, Head of Europe, TowerXchange
as September 2014, but if MTN or Vodacom did decide the time was right to sell towers, they’d have no shortage of bidders. Vodacom South Africa’s EBITDA margin was 37.4% in Q4 2014. MTN, South Africa’s second operator, currently has 28mn subscribers, and although intensifying competition in South Africa resulted in MTN’s market share declining by 2.7% over H1 2014, with revenue down 7% and EBITDA down 1.5%, negative subscriber growth has been reversed and MTN remains in a robust position.  MTN South Africa’s EBITDA margin was 32.1% in Q4 2014. MTN stepped back from a sale to American Tower in 2013 and until recently have appeared to lack the motivation to divest their South African towers. However Telkom’s RFP may well prove to be a catalyst for MTN reassessing this choice, indeed Airtel’s African tower sale triggered MTN to bring their Nigerian towers to market. Unsourced rumours in the press suggest MTN has again received interest from American Tower in at least part of their network of 9,000 towers, believed to be valued at $1.5-$2bn, and has been holding talks with potential buyers, although a deal is unlikely to happen in 2015. It remains to be seen whether the Group will re-evaluate their timetable to get to market first if the Telkom South Africa process does culminate in the sale of their towers. With around 19.6mn subscribers Cell C is the fastest growing operator in the South African market, growing market share by over 100% since 2013. Their introduction of a flat call-rate of 99c / min, www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com28 to any network, and the lowest data rate, of 0.15c/ MB has meant rapid growth in terms of market share and has challenged the high-margin stance of the other players in the market. Cell C has already divested around 1,400 towers to American Tower. Telkom, Africa’s largest fixed-line operator, has just 2mn mobile subscribers in South Africa. The company launched its mobile business in October 2010 and was privatised in 2013. However, despite Telkom’s leading role in the fixed-line market, their mobile offering has laboured to capture market share from leaders Vodacom and MTN. As a result Telkom has launched a restructuring plan to cut R5bn in costs which remains on track which remains on track with their share price better than doubling in the last 12 months. Although rumour has it that Telkom will only divest 500 of their macro towers rather than the formerly announced 3,500, the full portfolio could be worth as much as $1 billion and could free up significant capital for the operator, who are also believed to have an interest in acquiring competitor Cell C. Telkom has an existing agreement with MTN, signed in March 2014, which outlines intentions to conclude RAN sharing agreements. On 31st December 2014 Telkom stated: “Shareholders are further advised that Telkom and MTN South Africa remain in discussions regarding the potential extension of their existing roaming agreement to include bilateral roaming and outsourcing of the operation of Telkom’s radio access network, which if successfully concluded may have a material effect on the price of Telkom’s securities,” Vodacom South Africa 38.8 MTN South Africa 34.5% Cell C 24.2% Telkom Mobile 2.5% Source: TowerXchange South Africa mobile market share, Q4 2014 34.5% 38.8% 24.2% 2.5%
www.towerxchange.com | TowerXchange Issue 12 | 29| TowerXchange Issue 12 | www.towerxchange.comXX These plans to outsource management responsibilities for their radio access network to MTN, with a simultaneous process to divest passive infrastructure, mean Telkom may well be on the path towards backing their mobile offering into an MVNO and need to work out what the realistic return prospects might be on that basis. TowerXchange’s sources suggest that Telkom’s legacy urban sites are highly desirable on the basis that they were built several years ago, before site permitting rules were tightened up, meaning the portfolio could be extremely interesting to trade buyers. Tower assets Only 10% of South Africa’s towers are managed by independent towercos, with three of the top four operators retaining their own networks. There is already widespread bi-lateral tower sharing in the market, particularly between Vodacom and MTN, meaning any tower transaction would face a complicated path to convert so many swaps into commercial leases but on the plus side, it also means tenancy ratios would likely start nearer two than one, which significantly increases the valuation that could potentially be realised from a divested portfolio. Network roll-out According to ITWeb, MTN is investing R10bn in capex in 2015 (US$835mn), closely followed by Vodacom with R8.5bn (US$711mn) and Cell C with R5bn (US$417mn). Although three of the South African MNOs have commenced roll out of 4G (Vodacom has around 2,000 LTE base stations, Telkom has 1,300 and MTN 1,000), the main factor delaying LTE rollout is not technology or coverage but spectrum allocation. The South African government has suggested it wants to use the next round of spectrum licensing to introduce more competition in the wireless broadband space, but this translates in the short term into a five year wait (to date) for the Independent Communications Authority of South Africa (ICASA) to assign sought-after spectrum. The result of this is that although 4G is being heavily marketed, availability is limited in most of the country. The two most likely scenarios – releasing spectrum to the existing players or the introduction of a new MNO/MVNO would both be well served by an independent towerco landscape in South Africa which could offer fast and deep penetration of the market. Who will be interested in the South African towers? Although the strong transport and power infrastructure in South Africa make it a much easier market to operate in than any of its SSA neighbours and may well open up this process to towercos with less of a frontiersy appetite, it seems likely that the bidding will be dominated by Africa’s ‘Big Four’ towercos who all have the experience and relationships to deliver in the region. There’s no doubt American Tower have an interest Estimated macro tower count in South Africa MTN Telkom Vodacom *Cell C American Tower Eaton Other middle market and small towercos *In their Q4 2014 results Cell C announced that they had 4,524 sites on air. It is not clear which of those sites are owned towers, which were sold and leased back from American Tower, built to suit by American Tower or other suppliers, and which are co- locations on towerco or other operators’ towers. 9000 3500 7000 1918 170 200 500 Source: TowerXchange
in this opportunity in South Africa. As the biggest independent player in the market to date, they have proven relationships in place and a base from which to grow. Indeed, there are already reports that they are speaking to MTN about acquiring their towers. The 1,400 towers purchased from Cell C are already generating return on capital invested of approximately 20% in local currency and American Tower managed to increase the tenancy ratio from just over one to nearly two ‘tenant equivalents’ per tower within three years of their acquisition – South Africa has proven a successful and profitable market for American Tower. Of the other ‘Big Four’ players in Africa, Eaton already manages 170 BTS towers in the country, and their imminent acquisition in Egypt and associated capital raise demonstrates that they are still in the market to grow their portfolio in Africa through large scale tower deals. IHS’s control of the independent tower market in nearby Zambia and scale as the largest independent tower owner on the continent will undoubtedly lead them to assess the opportunities in South Africa and it seems likely that Helios, with broad experience of working in African markets, will have an interest in this profitable region. Towers in South Africa are operated under a simpler ‘steel and grass’ business model – towercos don’t have to get their hands dirty engaging with the energy supply chain as they do elsewhere in SSA. As such, South Africa could attract additional bidders including both International towercos and private equity and institutional funds with an www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com30 appetite for this asset class. We would expect the number of bidders, should MTN’s South African towers come to market, to exceed ten. Historically MTN has favoured retaining substantial equity in joint venture towercos in their most investible markets, retaining 49% equity in joint venture towercos with American Tower in Ghana and Uganda, and an unprecedented 51% equity in their joint venture towerco with IHS in Nigeria. Conclusion The Telkom and MTN portfolios together represent ~12,500 macro towers, or around 70% of the South African tower market. If both sale processes are completed within the next year, it would mean a significant shift from a 17% towerco presence to independent toweros controlling almost 90% of the market (factoring in continuing organic growth). With planned LTE rollouts and only 9% of the market served by wireline infrastructure, South African telecoms will see a huge rise in mobile data over the next few years, creating a very attractive market for whichever towerco or towercos manage to secure the assets.   It remains to be seen whether MTN will expedite the sale process in order to be the first to market and whether the South African market will be dominated by one player or split between two or more towercos, as we saw in Nigeria, but there is no doubt that the process will ignite the competition in the African market once again Meetup Africa 2015 Meetup Asia 2015 Meetup Americas 2016 www.towerxchange.com Meetup Europe & Global Award Ceremony 2016 1-2 October, Johannesburg 24-25 November, Singapore 14-15 June, São Paulo Q1 2016, London
Updated Asia tower counts and heatmap www.towerxchange.com | TowerXchange Issue 12 | 31| TowerXchange Issue 12 | www.towerxchange.comXX Bangladesh: Market restructuring continues in Bangladesh as edotco Bangladesh has signed an agreement with Qubee, a leading wireless broadband provider in this market, to share passive infrastructure and support their planned nationwide rollout. edotco had previously carved out 5,300 assets from Robi. Bharti Infratel may wish to enter the Bangladesh tower market, if the taxation environment were more favorable. Cambodia: the good news: Cambodia has 130%+ penetration and a sensibly restructured MNO market. The bad news: challenging grid conditions. edotco active in the market with 1,500 towers. CamGSM and Mobitel believed to have considered tower sales in the last few years. China: Established in 2014 and with a huge staff and 120,000 site BTS contract already secured, China Tower Company is reportedly set to take on ownership of approximately 950,000 telecom towers from the country’s three mobile network operators by 15 August 2015. It is estimated that China Mobile, China Unicom and China Telecom have 540,000, 279,000 and 180,000 towers respectively. India: The latest spectrum auctions have seen intense competition between the country’s mobile network operators over the bands required to continue upgrading 3G services and eventually offer 4G. Speculation continues over the potential sale or IPO of Viom Networks and the launch of a new towerco by BSNL but there have been no major recent developments. Indonesia: The Telkom-Mitratel-TBIG and XL Axiata STP transactions announced at the end of 2014 drove towerco ownership to 51% of Indonesia’s ~75,000 towers. TBIG and Protelindo’s tenancy ratios (1.7- 1.8), EBITDA and share price performance remain impressive, despite growing rumours of pressure on lease rates. Protelindo (11,216), IBS (2,079) and Re-tower (~450) also own significant portfolios, but our tip for growth in 2015 is KIN, who have set out to “roll up” some of Indonesia’s long tail of regional towercos. Malaysia: edotco has carved out 3,500 towers from Celcom in Malaysia. A further 3,200 towers are owned and operated by a diverse group of State-backed independent towercos. Malaysian commentators felt that the recent sale of one of the State-backed towercos, KJS, is an isolated incident, and that a substantial rollup of Malaysia’s smaller towercos is unlikely, given the alignment of political and personal interests it would require Source: TowerXchange Estimated Asian tower count comparisons China 950,000 India 450,000 Myanmar 6,850 Sri Lanka 7,000 Pakistan 35,000Malaysia 20,000 Vietnam 45,000 Indonesia 75,000 Bangladesh 26,000 Thailand 55,000
www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com32 across the country. Myanmar: Phases one and two of the rollout are complete. Telenor (through Apollo and IGT) and Ooredoo (through PAME and MTC) have rolled out the majority of the initial 5,000 towers they contracted - naturally a few locations were eliminated due to permitting issues or duplications. With MPT’s contractors building new towers too, there were around 6,850 towers lit in Myanmar at the start of Q2 2015. Tenancy ratios remain close to one. An attempt to co-ordinate the third phase of rollout between Telenor and Ooredoo has faltered, and separate contacts have been awarded, Ooredoo dividing around 2,500 phase three towers between MIG, IGT and one other towerco - possibly PAME. Telenor has awarded 800 towers to Young Investment Group’s Eco-Friendly Towers. It is not clear yet whether a further tranche of phase three towers has been awarded by Telenor. All phase three towers will include provision of power equipment by the respective towercos. Digicel MTC’s assets - around 800 phase 1 and 2 towers build for Ooredoo - are rumoured to be for sale. Pakistan: Substantial tower portfolios could be coming to market in the near to medium term with speculation increasing about the potential sale of Vimpelcom and Telenor’s assets in Pakistan. Thailand: CAT is forming a towerco targeting 22,000 towers. TRUEGIF already has 7,000. Yet international operators complain there is no way “ “ With MPT’s contractors building new towers too, there were around 6,850 towers lit in Myanmar at the start of Q2 2015 Year Country 2012 Indonesia 2011 Indonesia Seller Hutchison Infratel Buyer Protelindo Tower Bersama US$/Tower N/A N/A Towers/Sites 503 595 Value US$ N/A N/A 2014 Indonesia 2012 Indonesia 2010 Indonesia 2010 India PT Telkom PT Central Investindo Hutchison Essar Group Tower Bersama Protelindo Protelindo American Tower $230k N/A $112k $97.1 4000 152 1482 4450 $904mn* N/A $165.9mn $432mn 2014 Indonesia 2014 Malaysia 2012 Indonesia 2008 Indonesia 2010 India 2008 Indonesia 2009 India 2008 India XL Axiata KJS** Indosat Bakrie Aircel Hutchison Viom Networks Xcel** STP YTL Power International Tower Bersama STP GTL Infrastructure Protelindo QTIL American Tower $131.4k $48.5 $207.6k $64.4k $103k $135.4k £134k $98 3500 309 2500 543 17500 3692 18000 1730 $460mn $15mn $519mn $136mn $1800mn $136mn $2407mn $170mn *Structured as a share swap agreement, PT Telkom receiving ~13.7% stake in Tower Bersama over two phases in return for 100% of Mitratel Tower Bersama also acquired Telenet Internusa, Bali Telekom, Prima Media Selaras and SKP between 2004 and 2010, plus 295 towers from Mobile-8 in 2006 ** Company acquisition Source: TowerXchange Tower deals in Asia 2008-2014 (excluding carve-outs)
www.towerxchange.com | TowerXchange Issue 12 | 33| TowerXchange Issue 12 | www.towerxchange.comXX What proportion of the towers are owned by towercos? Estimated tower count for Malaysia 100 60% y/e 2014 85% y/e 2017 70% 51% 33% 33% 31% 20% 12% 80604020% Myanmar Myanmar India Indonesia Malaysia Cambodia Sri Lanka Bangladesh Vietnam Early stage markets: China, Pakistan, Thailand, Negligible towerco activity: Bhutan, Japan, Laos, PNG, Nepal, Philippines, Singapore Source: TowerXchange Sacofa 765 Touch Matrix 460 D’harmoni 346 KJS 309 Common Tower 260 Infra Quest 201 Yikedbina 200 Perak Integrated Networks 150 Asia Space 137 Desabina 118 Melaka ICT Holdings 9 5 Rangkaian Minang 90 PDC Telecommunications 4 3 Perlis Comm 23 edotco 3,500 13,300 Remaining MNO-captive 3,200 ge State-backed and other independent towercos for them to share towers in the country. Plans for a 4G spectrum auction in Thailand by September 2014 have been thrown into question due to potential regulatory hurdles and ongoing disputes between national and private network operators. Sri Lanka: Dialog has transferred 2,150 towers to edotco, and Bharti Infratel again believed to be interested in entering the market. High levels of bi-lateral sharing means tenancy ratios are closer to two than one. 4G driving need for cell site densification. Vietnam: Restructuring of the telecoms market in Vietnam continues, and interest in infrastructure sharing is increasing. Vinacap has acquired 3 companies and a portfolio of 1,930 towers in the Vietnamese market, and Golden Towers has approximately 600; towercos currently own 10 - 12% of towers in this market. Further baseline data and infographics on the India and Myanmar tower markets can be found in the India Special Feature and Myanmar Tower Dossier within this edition Source: TowerXchange
www.towerxchange.com | TowerXchange Issue 12 | 34| TowerXchange Issue 12 | www.towerxchange.com34 Asia heatmap Note: Russia is covered under Europe; we estimate it to have a 5% towerco penetration and we expect it to be a growth market Source: TowerXchange TowerXchange research has not revealed any infracos or towercos to date Towercos or infracos active in the market. No recent transactions have taken place and none rumoured to take place soon Towercos or infracos active in the market. No current transactions taking place but an attempted tower sale has taken place in the last 3 years or there are unconfirmed rumours of a deal in this market. Towercos or infracos active in the market. Rumours of deals confirmed in the market. Towercos or infracos active in the market. Deals of significant size have taken place in the last 5 years. Towercos or infracos active in the market. Deals have taken place in the last year and more imminent deals rumoured Legend
Thailand- CAT Telecom will reportedly complete the formation of Telecom Tower Company by Q3 2015 to optimise the management of its towers. CAT also aims to resolve ownership disputes on said towers with its concession holders Total Access Communication (DTAC) and TrueMove. Telecom Tower Co. should have 22,000 towers; 12,000 of these will be transferred from DTAC, 8,000 from TrueMove. The remaining 2,000 are already in CAT’s possession. Thailand - The upcoming Thai spectrum auction for technology-neutral (4G) mobile spectrum (900MHz and 1800MHz) licences expected to take place by September is now in doubt in spite reassurances from the Deputy Prime Minister, Pridiyathorn Devakula. Thai Prime Minister General Prayut Chan-o-cha has stated that it still remains to be seen if these auctions could take place under present law. At the same time Thailand’s ICT Ministry has gone on the record saying that all disputes over state and private network ownership should be resolved before these auctions take place. India - GTL is planning to sell off most of its assets to repay outstanding debts which amount to Rs.13,000 crore. GTL has received inquiries from investors in the UK and the US www.towerxchange.com | TowerXchange Issue 11 | 35| TowerXchange Issue 11 | www.towerxchange.com35 in the operations and maintenance part of its 28,000 towers, which is separate from its energy venture which is in the final stages of being sold to Intelligent Energy. The company is also looking into the possibility of diluting their promoter stake and entering into a joint venture. GTL’s problems began in 2013 when its acquisition of 17,000 of Aircel’s towers fell through after the regulatory restructuring in 2012. India - Indus Towers will spend INR2.2 billion (US$35.1 million) to convert 3,000 street lamps in New Delhi into telecom towers over the next three years according to the Economic Times. The aim is to install 2G/3G/4G antennae on 1,000 sites per year across New Delhi. The sites will be upgraded with energy efficient LEDlights, CCTV cameras and Wi-Fi access points and will also be connected to the main fibre-optic networks in the metro area. The is the first initiative of Indus Towers in support of the development of connected cities across India. Indonesia - Dian Siswarini has taken on the role of CEO of XL Axiata and is outlining her plans to boost the company’s brand and upgrade its data services. This move is in response to strong increase in demand for data; the company’s data traffic grew rapidly in 2013, increasing 126.7% to 123,824TB. Siswarini announced a combined brand strategy for XL and Axis, with XL focussing on the high bandwidth mobile data segment and Axis on more competitively priced products for lower-volume users. Axiata plans to invest IDR7 trillion (US$537 million) on upgrading its 3G and 4G services in 2015. Indonesia - Solusi Tunas Pratama (STP) is planning a sale of its shares in Q2 2015 and expects to raise up to US$400 million. STP also sold a US$300 million five-year bond on the international markets earlier this year. The company owns over 6,000 towers in Indonesia after aquiring 3,500 towers from PT XL Axiata in 2014. STP is partly owned by US private equity firm Carlyle Group. China - China Tower Company, the telecom infrastructure sharing company owned by China Mobile, China Telecom and China Unicom is reportedly set to take on ownership of nearly one million telecom towers according to analysts at Barclays. According to the report the three operators will receive gains totalling 148 billion yuan (US$23.88 billion). Barclays has estimated that China Mobile, China Unicom and China Telecom had 540,000, 279,000 and 180,000 towers respectively. Barclays also estimate that this joint venture would reduce capex by approximately 6% for a five-year saving of 76 billion yuan Asia News
Crown Castle entertaining offers for their 1,772 towers in Australia Potential buyers are lining up to acquire this profitable tower portfolio, marking a major potential deal in the Australian market Crown Castle International Corp., the largest provider of shared wireless infrastructure in the US, is considering the sale of its share in Australian subsidiary CCAL. Crown Castle currently owns a 77.6% stake in CCAL which is the largest wireless tower operator in Australia. The CCAL portfolio includes 1,772 towers with an average tenancy believed to be around 2.4, generating roughly US$107bn EBITDA on an LQA basis. According to the Australian Financial Review, the towers are expected to sell for ~US$1.25bn, representing 17x-18x earnings. Crown Castle Australia has been responsible for the vast majority of tower deals in Australia since it was founded in 2000; it built its portfolio with towers acquired from Optus, Hutchison and Vodafone between 2000 and 2008. In a recent news release, Crown Castle’s President and Chief Executive Officer Ben Moreland stated “In light of recent unsolicited offers we have received for our interest in CCAL, we have determined that fully exploring the options available to us will ensure the best long-term results for our shareholders. Similar to our US business, CCAL has developed into a leading wireless infrastructure provider in the attractive Australian market with a unique portfolio of assets and platform for future growth and expansion.” The Australian telecoms infrastructure market is highly consolidated; 74% of the estimated 9,000 towers are owned by the top three network operators, Telstra, SingTel (Optus) and Vodafone Hutchison Australia. Telstra owns the lions-share of operator captive sites, but has finite appetite Read this article to learn: < Background information on Crown Castle International including tower footprint < An overview of the Australian operator and tower markets < Understanding the main motivating factors behind the sale < A look at some of the potential buyers Telstra subscribers Optus subscribers Vodafone subscribers MNOs Towercos, independents and government agencies 80 60 40 20 70 50 30 10 Source: TowerXchange Keywords: Australia, MNOs, Towercos, Investors, Asia Pacific, Deal Structure, Acquisition, Market Overview, 3G, 4G, EBITDA, Telstra, Optus, SingTel, Vodafone, Hutchison, Morgan Stanley, Credit Suisse, Brookfield, Macquarie, AMP Capital, Crown Castle www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com36 Breakdown of the Australian tower marketTelstra remains the market leader 16 million 9.4 million 5 million 76% 24%
for sharing, and no apparent interest or incentive to divest the assets. According to Buddecom, Telstra remains the market leader with more than 16mn subscribers, while Optus has around 9.4mn and Vodafone now has fewer than five million, compared to about 7.6mn in 2010. The remaining 26% of the tower market is controlled by Crown Castle Australia, Broadcast Australia and other smaller players and government agencies. The continued rollout of LTE after the 700MHz spectrum auctions in 2013, and NBN (National Broadband Network) investment in fixed and wireless infrastructure, suggests that there may be some potential growth in the Australian telecoms infrastructure market. However, Telstra views its superior network coverage as a major competitive advantage and is unlikely to sell its infrastructure or engage in active network sharing anytime soon. It seems that an initial process initiated by a minority shareholder attracted unsolicited offers for 100% of the equity in CCAL. The Australian states that Morgan Stanley and Credit Suisse have been appointed to lead an auction process, with Brookfield, Macquarie Infrastructure and Real Assets (MIRA) and AMP Capital mentioned as prospective bidders. Crown Castle’s Australian business has been a highly profitable portfolio and is likely to continue being profitable for the foreseeable future. This could ultimately play out similar to Crown Castle’s successful entry into and exit from the UK market. Given CCI’s status as an REIT in the US as of January 2014 they can’t fully take advantage of registering as a REIT in Australia. The tax regime in Australia would seem to facilitate a mutually beneficial transaction, enabling  a local infrastructure, superannuation or pension fund to benefit from a more favorable tax status by putting the CCAL assets into a REIT, and the relatively slow growth and stable revenues seem better suited to this rather than another international towerco pursuing aggressive growth. Australia is receiving growing recognition as having the world’s largest REITs market outside the United States. More than 12 percent of global listed property trusts can be found on the ASX. The prospective divestiture of Crown Castle’s assets in Australia would seem to align with the company’s increasing focus on the performance and expansion of their portfolio of 40,000 macro and 14,000 small cell nodes in their US domestic market www.towerxchange.com | TowerXchange Issue 12 | 37| TowerXchange Issue 12 | www.towerxchange.comXX “ “In light of recent unsolicited offers we have received for our interest in CCAL, we have determined that fully exploring the options available to us will ensure the best long-term results for our shareholders Visit the TowerXchange.com website < Access to the “Internet of People” in emerging market towers – a trust web of over +10,000 decision makers in passive infrastructure < Independent analysis and commentaries on the prospects for tower transactions in selected countries < The latest industry emerging market tower industry news – BEFORE it’s published in the TowerXchange Journal, accessible 24/7 from desktop, tablet or mobile < A comprehensive archive of TowerXchange’s interviews and analyses, searchable by topic, country, company or grouped by category (e.g. interviews or how to guides) < The latest news and registration information about TowerXchange’s Meetups.
Asset transfer and deal size accelerating in the European market Unlike the African or Latin American markets, the European independent tower market has achieved significant scale without the need for a ‘land grab’ of tower transactions in the last few years, mainly due to the availability of legacy infrastructure and towerco growth through broadcast and utility www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com38 assets. However with over 20 towercos active in the region and an increasing interest from infrastructure funds and strategic investors, there is potential for further deal flow in European towers. Over the last seven years ten deals of scale have taken place in the European market, transferring around 18,000 towers from operator-captive to independent ownership. Of this, 11,654 towers (65%) have been bought in the last two years by the highly acquisitive Abertis, at a cost of €1.17 billion. TowerXchange believes that 2015 will see more deal activity in Southern Europe, in particular the Orange assets in Spain and Telecom Italia’s towers in Italy, although it is as yet unclear whether their proposed IPO will take place or whether Abertis’ rumoured interest in the assets will result in another tower sale. TowerXchange is also tracking the repeated attempts by incumbent Italian towerco EI Towers to acquire a significant stake in Rai Way, who own 2,300 broadcast and transmission sites in the country. TowerXchange has identified over 20 independent towercos who own and manage towers in Europe. Of these, ten are believed to be members of the new European Wireless Industry Association: Abertis (Spain and Italy), Arqiva (UK), Axion (Spain), EI Towers (Italy), FPS Towers (France), Open Tower Company (Netherlands), TowerCom (Ireland), American Tower Germany, Protelindo (Netherlands) and Wireless Infrastructure Group (UK and Netherlands). In addition, a further seven towercos manage in excess of 250 towers across their portfolios; Shere Group (UK and Netherlands), TDF (France and Germany), Russian Tower (Russia), UKRTower (Ukraine), Emitel (Poland), Global Tower (Turkey) and ESB (Ireland). In total these towercos manage over 65,000 towers across Europe, Russia and Turkey Top ten independent towercos in Europe by telecom tower count (excludes infracos) 5000 A bertis TD F A rqiva G lobal Tow er EITow ers FPS A m erican Tow er G erm any W ireless Infrastructure G roup Russian Tow ers Shere G roup 10000 15000 20000 15377 11000 10550 7870 2700 2166 2031 2000 1500 860 Source: TowerXchange
www.towerxchange.com | TowerXchange Issue 12 | 39| TowerXchange Issue 12 | www.towerxchange.comXX European tower deals since 2008 European tower activity - the headlines Year 2012 2012 2012 2010 2008 2014 2012 2015 2015 2012 Country Towerco Operator #Towers Deal value Cost per towerDeal terms France Germany Netherlands Netherlands Netherlands Spain Spain Italy Italy Netherlands FTP American Tower Protelindo Open Tower Company Open Tower Company Abertis Abertis Abertis Abertis Shere Group Bougyes Telecom KPN KPN KPN KPN Telefonica/Yoigo Telefonica TowerCo Wind KPN €185 million €100,400 €393 million €193,500 €75 million €287,000 Unavailable NA Unavailable NA 2166 2031 261 500 101 €385 million €90,000 €45 million €90,000 4277 500 €94.6 million €309,000 per site €693 million €104,400 €115 million €250,000 212 (plus 94 points in tunnels) 7377 460 SLB with 15% equity SLB SLB SLB SLB SLB SLB Trade sale SLB with 10% equity SLB Source: TowerXchange Czech Republic Infraco formed by PPF and T-Mobile Denmark Falck (towerco) and Hi3G (infraco) have small portfolios Finland Digita sold to First State Investments in 2012 France Towerco FPS active after acquiring towers from Bougyes Telecom. TDF lead the market, ITAS TIM and Towercast also active Germany Towercos Deutsche Funkturm and American Tower active in the market, ATC's towers bought from KPN Hungary Antenna Hungaria acquired by the state from TDF in 2014 Ireland Several middle market towercos, rumoured that Telefonica would divest towers but no movement as yet Italy Towerco Abertis have made 2 recent acquisitions. Current activity with Telecom Italia towers and EI/ RaiWay Latvia Bite Group brought towers to market in 2013 but no agreement reached Netherlands Protelindo, Shere Group and Open Tower acquired a total of 1,322 towers from KPN Poland Emitel (towerco) and NetWorkS! (infraco) active in the market Portugal Portugal Telecom towers rumoured to be brought to market in 2014 although no sale agreed Russia Towercos Russian Tower and Link Development active in the market, rumour that Vimpelcom towers may be first to come to market Spain Towerco Abertis active after acquiring towers from Telefonica/Yoigo. Axion also active Sweden Several infracos including Net4Mobility, 3GiS and SUNAB Turkey Turkcell’s Global Tower manages over 16,000 sites including 7,000 macro towers UK Towercos active in the market include Arqiva, WIG and Shere Group, MBNL and Cornerstone sizable infracos Ukraine Towerco UKRTower active in the market
www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com40 European heatmap TowerXchange research has not revealed any infracos or towercos to date Towercos or infracos active in the market. No recent transactions have taken place and none rumoured to take place soon Towercos or infracos active in the market. No current transactions taking place but an attempted tower sale has taken place in the last 3 years or there are unconfirmed rumours of a deal in this market. Towercos or infracos active in the market. Rumours of deals confirmed in the market. Towercos or infracos active in the market. Deals of significant size have taken place in the last 5 years. Towercos or infracos active in the market. Deals have taken place in the last year and more imminent deals rumoured Legend Note: For the purposes of our European coverage, ‘Towerco’ describes an independent company which owns and operates passive infrastructure for commercial profit. ‘Infraco’ incorporates MNO joint venture organisations and carve outs which serve more than one entity or market their towers commercially Source: TowerXchange
Poland – Aero2, owned by Poland’s Midas Group, has announced the launch of LTE services. The operator will use over 1,000 LTE- 800 base stations in addition to its existing 4,170 transmitters. Midas claims its combined LTE networks now reach more than 90% of Poland’s population UK – Hutchison Whampoa Limited, parent company of UK based operator Three, has confirmed its intention to buy British operator O2. HWL confirmed that it will acquire O2 UK for £9.25 billion, creating the UK’s largest mobile network operator with over 33 million subscribers. The tower assets of O2 and 3 are currently managed by different infracos (Cornerstone and MBNL) so TowerXchange awaits new of their network plans with interest. Ukraine - Kyivstar, Ukraine’s largest MNO, has released information on its future-proof Single RAN network design for new infrastructure, enabling it to upgrade to LTE simply by updating software and meaning they do not need to upgrade hardware on their base stations, which already support 2G GSM, 3G UMTS and 4G LTE. Romania - The largest MNO in Romania, Orange, has announced it will spend €500 million by 2018 as part of parent company Orange Group’s €15 billion investment in their European www.towerxchange.com | TowerXchange Issue 12 | 41| TowerXchange Issue 12 | www.towerxchange.comXX networks in 2015-17. CEO Jean Francois Fallacher also stated that the MNO is asking for changes in Romanian regulations to oblige companies with fixed infrastructure to open access to rivals in the same way mobile networks are required to do. France - France has called upon its MNOs to address ‘not-spots’ in rural areas within the next 18 months. Les Echos reported that France’s Prime Minister Manuel Valls called for provision of 3G services in ‘white areas’ in this timeframe. The French government has allocated a total of €1 billion to address public services issues in underserved locations. Croatia – Tele2 Croatia and Huawei have signed a contract to roll out 3G to all Tele2’s mobile sites and for additional passive infrastructure to be constructed in order to improve coverage. It is expected that Huawei will use its Single-RAN wireless network solution to allow for future network upgrades without additional hardware. Italy – EI Towers’ interest in RaiWay continues, with a revised bid for a 49% stake in the company, which would allow the Italian government to retain a critical 51% stake in RaiWay themselves. EI Towers has submitted more information on the proposed €1.23 billion takeover to market regulator Consob. Europe News Italy – Telecom Italia may consider selling their towers unit Inwit to Abertis Telecom (Cellnex) rather than following through on plans to list the company before the summer. Inwit has around 11,500 towers in their portfolio. Abertis have confirmed to TowerXchange that they are monitoring the Italian market closely, however their own plans for an IPO may complicate a potential deal. Netherlands – Liberty Global, the Dutch operator, is expected to acquire either Vodafone Netherlands or T-Mobile Netherlands in a deal worth €3-4 billion. It is rumoured that all parties have acknowledged the need for consolidation and Liberty Global is expected to be the acquiring party. Some sources claim the deal may spark wider M&A activity in Europe, with asset swaps in other markets a strong possibility. Spain – Abertis have formally announced the IPO of their telecoms unit, offering 55% of wholly-owned subsidiary Cellnex Telecom with an over-allotment of an additional 5.5%. Tobias Martinez, CEO of Cellnex Telecom said “Our diversified and highly visible revenue streams, healthy pipeline of growth opportunities and experienced management team place us in an optimal position to continue our rapid growth trajectory. Looking ahead, we are seeing significant potential for growth in telecom site outsourcing in Europe with very favourable underlying market dynamics.”
Abertis agree to buy Wind towers for $774 million Deal gives Abertis a foothold in the Italian market The bidders Abertis’ telecoms business focusses on telecoms, media and public administration, with tower sites to date in Spain and Italy. Currently the most acquisitive of the European towercos, their focus on creating a pipeline of tower acquisition opportunities across the continent in the face of limited competition is moving them quickly into the position of Europe’s largest multi-country towerco. Abertis has also recently confirmed plans to spin out the Abertis Telecom part of the business via IPO to allow them to take advantage of “a market where there are currently many opportunities, particularly in the European mobile telephone towers segment”. Abertis reportedly beat Italian investment fund F2i’s joint offer with Providence Equity Partners, who also backed Helios Towers Africa in their most recent round of capital raising, coinciding with the acquisition of part of Bharti Airtel’s tower portfolio in Q4 2014. Combining Providence Equity Partners’ experience and appetite for the tower market with F2i’s expertise in Italian infrastructure, particularly in the areas of utilities and transportation, they appeared to be strong contenders. However there is no information in the public domain about how the assets would have been managed if their bid has been successful, raising the possibility that they would have either recruited a management team or made a trade acquisition to obtain the necessary skills and processes wholesale. Other early contenders for the deal were believed Read this article to learn: < Which towercos and organisations were interested in the Europe’s largest tower divestment in recent years < Why Abertis were successful in securing the deal < What market factors precipitated the sale of Wind’s Italian towers < How the deal compares to other large European tower sales A deal between Abertis and Wind, the Italian mobile network operator controlled by Russian telecoms giant Vimpelcom, closed at the end of March. The deal, for a 90% stake in Wind’s tower subsidiary Galata, which owns 7377 towers, is worth €693 million or US$774 million. Keywords: News, Editorial, Europe, Italy, Wind, Abertis, American Tower, Telecom Italia, Deal Structure, Acquisition, Market Overview, Valuation, Investment, LTE, Lease Rates, Transfer Assets, Co-locations, Infrastructure Sharing, First Mover Advantage, Debt Finance, Cashflow Finance, Infrastructure Funds www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com42
to include Italian native, Mediaset-controlled EI Towers, and American Tower. It is rumoured that American Tower withdrew from the process after successfully agreeing deals to acquire over 22,600 towers in deals with TIM in Brazil, Airtel in Nigeria and most recently with Verizon in their home US market. American Tower are however believed to retain ambitions to expand their footprint in Europe beyond their existing portfolio of just over 2,000 towers in Germany. Drivers for the deal As with all significant tower deals, the sale of a tower portfolio allows operators to release cash and stabilise opex. In the case of Wind, this will mean an opportunity to reduce debt, which at group level at Vimpelcom currently stands at €27.7 billion gross, and meet the capital requirements for LTE roll-out in Italy. The Italian market Italian mobile market penetration currently stands at around 158%, one of the highest rates of penetration in Europe. Wind is Italy’s third largest operator with 24% of market share behind TIM (35%), Vodafone (31%) and ahead of 3 (10%). The LTE rollout in Italy is currently well underway with TIM rolling out 4G+ in 60 cities and Vodafone in 80 cities nationwide. The network requirement of LTE rollout is currently estimated at around 7,000 towers and there is considerable overlap of existing coverage by several Italian operators. Although TIM and Vodafone did agree to passive infrastructure www.towerxchange.com | TowerXchange Issue 12 | 43| TowerXchange Issue 12 | www.towerxchange.comXX sharing in rural areas (populations <35,000) and for new 4G tower builds, their agreement doesn’t extend to the country’s most populated areas and tower sharing in Italy stood at under 20% before the Abertis deal. In a mature market where network coverage no longer offers significant competitive advantage and efficiencies can be found in co-location for LTE rollout, operators can gain significantly from a substantial towerco presence in order to consolidate their networks and reduce opex. Current towerco activity in Italy Until recently, the Italian market was dominated by EI Towers, controlled by Italian media giant Mediaset. EI Towers owns around 2,700 sites across Italy and, like other European towercos such as Arqiva and TDF, now offers telecoms solutions after originating in the broadcast industry. Although the Wind deal is the first substantial tower divestment in Italy to date, there has been rumors of aborted processes dating back as far as 2007, when Wind and 3 Italia attempted to divest a joint portfolio of 18,000 towers but failed to find buyers who would meet their valuation. As recently as 2014 TIM proposed the sale of its 12,000 Italian towers and did indeed sell 6,480 of its Brazilian towers to American Tower for $1.2 billion in a bid to reduce the company’s debt and regain an investment-grade rating after being downgraded to ‘junk’ status in November 2013. Current reports suggest that TIM is now considering an IPO for their Italian tower portfolio in 2015. Abertis already owns tower assets in Italy, having Albertis El Towers Inwit, Telecom Italia’s Towerco Operator-Captive Small local tower owners with <30 towers 7683 300 2700 12,000 14,000 Figure 1: Estimated breakdown of tower ownership in Italy
bought TowerCo from Alantia in 2014 for €94.6 million. TowerCo works with all of the country’s major MNOs including Telecom Italia, Vodafone, Wind and 3 Italia. Abertis is believed to have acquired all 306 sites managed by TowerCo, which offer coverage for over 3,000km of toll road in Italy including 212 towers and 94 points in tunnels. Adding the 7,377 Wind towers to their portfolio will increase Abertis’ footprint and make them the largest towerco in Italy by a considerable margin. Taking into account reports of Telecom Italia’s tower portfolio standing at around 12,000, EI Towers’ at 2700, and estimating that the remaining operator-captive towers will number around 14,000, Abertis’ new combined tower portfolio of 7683 will represent around 20% of the total number of towers in Italy.  Comparison with the broader European tower market to date Over the last three  years the European tower market has seen several deals of substantial scale involving the transfer of assets from mobile network operators to independent towercos, most notably the Bougyes Telecom deal with FPS in 2012, KPN’s German operator E-Plus and American Tower in 2012 and most recently the transfer of Telefonica’s Spanish tower portfolio to Abertis in 2014. When viewed as a set, it’s clear that Europe’s largest (1,000+ towers and excluding carve-outs) transactions are increasing in scale, indicating that not only is the market more able to attract and deploy the capital to transfer larger portfolios, but also that operators are willing to commit more established assets and no longer view their networks as a critical competitive advantage. When assessed alongside the cost of each transaction, however, the resulting cost per tower is much more variable, indicating that there is no ‘one size fits all’ approach for the European tower market and that variables such as leaseback rates, tenancy ratios, tower condition and location play an important a role www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com44 Europe’s biggest tower deals Cost of transaction Number of towers in transaction Cost per tower
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12
TowerXchange-Issue_12

Recommended

TowerXchange-Issue_11
TowerXchange-Issue_11TowerXchange-Issue_11
TowerXchange-Issue_11
Toya Smith
 
TowerXchange-Issue_8
TowerXchange-Issue_8TowerXchange-Issue_8
TowerXchange-Issue_8
Toya Smith
 
TowerXchange-Issue_9
TowerXchange-Issue_9TowerXchange-Issue_9
TowerXchange-Issue_9
Toya Smith
 
TowerXchange-Issue_10
TowerXchange-Issue_10TowerXchange-Issue_10
TowerXchange-Issue_10
Toya Smith
 
TX_MeetupEurope2016_Report
TX_MeetupEurope2016_ReportTX_MeetupEurope2016_Report
TX_MeetupEurope2016_Report
Annabelle Mayhew
 
Tower xchange issue 3 featuring Broadnet Telecom
Tower xchange issue 3 featuring Broadnet TelecomTower xchange issue 3 featuring Broadnet Telecom
Tower xchange issue 3 featuring Broadnet Telecom
arichardson1906
 
Tower xchange issue 3 hi res
Tower xchange issue 3 hi resTower xchange issue 3 hi res
Tower xchange issue 3 hi res
Kieron Osmotherly
 
Tower xchange issue 2 hi res
Tower xchange issue 2 hi resTower xchange issue 2 hi res
Tower xchange issue 2 hi res
Kieron Osmotherly
 

Recommended

TowerXchange-Issue_11
TowerXchange-Issue_11TowerXchange-Issue_11
TowerXchange-Issue_11
Toya Smith
 
TowerXchange-Issue_8
TowerXchange-Issue_8TowerXchange-Issue_8
TowerXchange-Issue_8
Toya Smith
 
TowerXchange-Issue_9
TowerXchange-Issue_9TowerXchange-Issue_9
TowerXchange-Issue_9
Toya Smith
 
TowerXchange-Issue_10
TowerXchange-Issue_10TowerXchange-Issue_10
TowerXchange-Issue_10
Toya Smith
 
TX_MeetupEurope2016_Report
TX_MeetupEurope2016_ReportTX_MeetupEurope2016_Report
TX_MeetupEurope2016_Report
Annabelle Mayhew
 
Tower xchange issue 3 featuring Broadnet Telecom
Tower xchange issue 3 featuring Broadnet TelecomTower xchange issue 3 featuring Broadnet Telecom
Tower xchange issue 3 featuring Broadnet Telecom
arichardson1906
 
Tower xchange issue 3 hi res
Tower xchange issue 3 hi resTower xchange issue 3 hi res
Tower xchange issue 3 hi res
Kieron Osmotherly
 
Tower xchange issue 2 hi res
Tower xchange issue 2 hi resTower xchange issue 2 hi res
Tower xchange issue 2 hi res
Kieron Osmotherly
 
Spanish Digital Startup Ecosystem Overview 2015
Spanish Digital Startup Ecosystem Overview 2015Spanish Digital Startup Ecosystem Overview 2015
Spanish Digital Startup Ecosystem Overview 2015
Aleix Valls
 
1Q 2018 European Venture Report
1Q 2018 European Venture Report1Q 2018 European Venture Report
1Q 2018 European Venture Report
Amalist Client Services
 
digital
digitaldigital
digital
Douglas Inoguti
 
Tracxn - Monthly Report - Europe Tech - Oct 2021
Tracxn - Monthly Report - Europe Tech - Oct 2021Tracxn - Monthly Report - Europe Tech - Oct 2021
Tracxn - Monthly Report - Europe Tech - Oct 2021
Tracxn
 
Tracxn - Geo - Germany Tech - Feb 2021
Tracxn - Geo - Germany Tech - Feb 2021Tracxn - Geo - Germany Tech - Feb 2021
Tracxn - Geo - Germany Tech - Feb 2021
Tracxn
 
Tracxn - Monthly Report - Africa Tech - Oct 2021
Tracxn - Monthly Report - Africa Tech - Oct 2021Tracxn - Monthly Report - Africa Tech - Oct 2021
Tracxn - Monthly Report - Africa Tech - Oct 2021
Tracxn
 
Tracxn - Geo - MENA Tech - Jan 2021
Tracxn - Geo - MENA Tech - Jan 2021Tracxn - Geo - MENA Tech - Jan 2021
Tracxn - Geo - MENA Tech - Jan 2021
Tracxn
 
Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)
Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)
Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)
Telefónica IoT
 
Tracxn - Monthly Report - Germany Tech - August 2021
Tracxn - Monthly Report - Germany Tech - August 2021Tracxn - Monthly Report - Germany Tech - August 2021
Tracxn - Monthly Report - Germany Tech - August 2021
Tracxn
 
Spanish investment highlights 2013 2014
Spanish investment highlights 2013 2014Spanish investment highlights 2013 2014
Spanish investment highlights 2013 2014
Venture Watch
 
Tracxn-Geo-Nordics Tech-July 2021
Tracxn-Geo-Nordics Tech-July 2021Tracxn-Geo-Nordics Tech-July 2021
Tracxn-Geo-Nordics Tech-July 2021
Tracxn
 
Tracxn - Geo - UK & Ireland Tech
Tracxn - Geo - UK & Ireland TechTracxn - Geo - UK & Ireland Tech
Tracxn - Geo - UK & Ireland Tech
Tracxn
 
Tracxn - Geo - Netherlands Tech
Tracxn - Geo - Netherlands TechTracxn - Geo - Netherlands Tech
Tracxn - Geo - Netherlands Tech
Tracxn
 
TX_CALAProspectus_2017 copy
TX_CALAProspectus_2017 copyTX_CALAProspectus_2017 copy
TX_CALAProspectus_2017 copy
Sarah Kerr
 
2016 Global Telco Innovation Targets from TC3 Summit 2015
2016 Global Telco Innovation Targets from TC3 Summit 20152016 Global Telco Innovation Targets from TC3 Summit 2015
2016 Global Telco Innovation Targets from TC3 Summit 2015
Telecom Council
 
TX_Tecnorad_Issue15
TX_Tecnorad_Issue15TX_Tecnorad_Issue15
TX_Tecnorad_Issue15
Mauro Cerboni
 
Pacnet Story 20101108
Pacnet Story 20101108Pacnet Story 20101108
Pacnet Story 20101108
Ömer Can Şirikçi
 
(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1
(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1
(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1
George Clarke
 
JULY06
JULY06JULY06
JULY06
Hadass Geyfman
 
VERIZON - CASE ANALYSIS
VERIZON - CASE ANALYSISVERIZON - CASE ANALYSIS
VERIZON - CASE ANALYSIS
Carlos Philip Bardales
 
Powering Safe and Reliable Railways telecommunication to support Middle East ...
Powering Safe and Reliable Railways telecommunication to support Middle East ...Powering Safe and Reliable Railways telecommunication to support Middle East ...
Powering Safe and Reliable Railways telecommunication to support Middle East ...
Ibrahim Al-Hudhaif
 
Investment pitch deck-v10
Investment pitch deck-v10Investment pitch deck-v10
Investment pitch deck-v10
Standard Ascension Towers Group, Corp
 

More Related Content

What's hot

Spanish Digital Startup Ecosystem Overview 2015
Spanish Digital Startup Ecosystem Overview 2015Spanish Digital Startup Ecosystem Overview 2015
Spanish Digital Startup Ecosystem Overview 2015
Aleix Valls
 
1Q 2018 European Venture Report
1Q 2018 European Venture Report1Q 2018 European Venture Report
1Q 2018 European Venture Report
Amalist Client Services
 
digital
digitaldigital
digital
Douglas Inoguti
 
Tracxn - Monthly Report - Europe Tech - Oct 2021
Tracxn - Monthly Report - Europe Tech - Oct 2021Tracxn - Monthly Report - Europe Tech - Oct 2021
Tracxn - Monthly Report - Europe Tech - Oct 2021
Tracxn
 
Tracxn - Geo - Germany Tech - Feb 2021
Tracxn - Geo - Germany Tech - Feb 2021Tracxn - Geo - Germany Tech - Feb 2021
Tracxn - Geo - Germany Tech - Feb 2021
Tracxn
 
Tracxn - Monthly Report - Africa Tech - Oct 2021
Tracxn - Monthly Report - Africa Tech - Oct 2021Tracxn - Monthly Report - Africa Tech - Oct 2021
Tracxn - Monthly Report - Africa Tech - Oct 2021
Tracxn
 
Tracxn - Geo - MENA Tech - Jan 2021
Tracxn - Geo - MENA Tech - Jan 2021Tracxn - Geo - MENA Tech - Jan 2021
Tracxn - Geo - MENA Tech - Jan 2021
Tracxn
 
Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)
Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)
Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)
Telefónica IoT
 
Tracxn - Monthly Report - Germany Tech - August 2021
Tracxn - Monthly Report - Germany Tech - August 2021Tracxn - Monthly Report - Germany Tech - August 2021
Tracxn - Monthly Report - Germany Tech - August 2021
Tracxn
 
Spanish investment highlights 2013 2014
Spanish investment highlights 2013 2014Spanish investment highlights 2013 2014
Spanish investment highlights 2013 2014
Venture Watch
 
Tracxn-Geo-Nordics Tech-July 2021
Tracxn-Geo-Nordics Tech-July 2021Tracxn-Geo-Nordics Tech-July 2021
Tracxn-Geo-Nordics Tech-July 2021
Tracxn
 
Tracxn - Geo - UK & Ireland Tech
Tracxn - Geo - UK & Ireland TechTracxn - Geo - UK & Ireland Tech
Tracxn - Geo - UK & Ireland Tech
Tracxn
 
Tracxn - Geo - Netherlands Tech
Tracxn - Geo - Netherlands TechTracxn - Geo - Netherlands Tech
Tracxn - Geo - Netherlands Tech
Tracxn
 

What's hot (13)

Spanish Digital Startup Ecosystem Overview 2015
Spanish Digital Startup Ecosystem Overview 2015Spanish Digital Startup Ecosystem Overview 2015
Spanish Digital Startup Ecosystem Overview 2015
 
1Q 2018 European Venture Report
1Q 2018 European Venture Report1Q 2018 European Venture Report
1Q 2018 European Venture Report
 
digital
digitaldigital
digital
 
Tracxn - Monthly Report - Europe Tech - Oct 2021
Tracxn - Monthly Report - Europe Tech - Oct 2021Tracxn - Monthly Report - Europe Tech - Oct 2021
Tracxn - Monthly Report - Europe Tech - Oct 2021
 
Tracxn - Geo - Germany Tech - Feb 2021
Tracxn - Geo - Germany Tech - Feb 2021Tracxn - Geo - Germany Tech - Feb 2021
Tracxn - Geo - Germany Tech - Feb 2021
 
Tracxn - Monthly Report - Africa Tech - Oct 2021
Tracxn - Monthly Report - Africa Tech - Oct 2021Tracxn - Monthly Report - Africa Tech - Oct 2021
Tracxn - Monthly Report - Africa Tech - Oct 2021
 
Tracxn - Geo - MENA Tech - Jan 2021
Tracxn - Geo - MENA Tech - Jan 2021Tracxn - Geo - MENA Tech - Jan 2021
Tracxn - Geo - MENA Tech - Jan 2021
 
Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)
Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)
Smart World: How the Alliances are Driving the M2M Ecosystem (Telefónica m2m)
 
Tracxn - Monthly Report - Germany Tech - August 2021
Tracxn - Monthly Report - Germany Tech - August 2021Tracxn - Monthly Report - Germany Tech - August 2021
Tracxn - Monthly Report - Germany Tech - August 2021
 
Spanish investment highlights 2013 2014
Spanish investment highlights 2013 2014Spanish investment highlights 2013 2014
Spanish investment highlights 2013 2014
 
Tracxn-Geo-Nordics Tech-July 2021
Tracxn-Geo-Nordics Tech-July 2021Tracxn-Geo-Nordics Tech-July 2021
Tracxn-Geo-Nordics Tech-July 2021
 
Tracxn - Geo - UK & Ireland Tech
Tracxn - Geo - UK & Ireland TechTracxn - Geo - UK & Ireland Tech
Tracxn - Geo - UK & Ireland Tech
 
Tracxn - Geo - Netherlands Tech
Tracxn - Geo - Netherlands TechTracxn - Geo - Netherlands Tech
Tracxn - Geo - Netherlands Tech
 

Similar to TowerXchange-Issue_12

TX_CALAProspectus_2017 copy
TX_CALAProspectus_2017 copyTX_CALAProspectus_2017 copy
TX_CALAProspectus_2017 copy
Sarah Kerr
 
2016 Global Telco Innovation Targets from TC3 Summit 2015
2016 Global Telco Innovation Targets from TC3 Summit 20152016 Global Telco Innovation Targets from TC3 Summit 2015
2016 Global Telco Innovation Targets from TC3 Summit 2015
Telecom Council
 
TX_Tecnorad_Issue15
TX_Tecnorad_Issue15TX_Tecnorad_Issue15
TX_Tecnorad_Issue15
Mauro Cerboni
 
Pacnet Story 20101108
Pacnet Story 20101108Pacnet Story 20101108
Pacnet Story 20101108
Ömer Can Şirikçi
 
(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1
(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1
(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1
George Clarke
 
JULY06
JULY06JULY06
JULY06
Hadass Geyfman
 
VERIZON - CASE ANALYSIS
VERIZON - CASE ANALYSISVERIZON - CASE ANALYSIS
VERIZON - CASE ANALYSIS
Carlos Philip Bardales
 
Powering Safe and Reliable Railways telecommunication to support Middle East ...
Powering Safe and Reliable Railways telecommunication to support Middle East ...Powering Safe and Reliable Railways telecommunication to support Middle East ...
Powering Safe and Reliable Railways telecommunication to support Middle East ...
Ibrahim Al-Hudhaif
 
Investment pitch deck-v10
Investment pitch deck-v10Investment pitch deck-v10
Investment pitch deck-v10
Standard Ascension Towers Group, Corp
 
Ictmarch2009
Ictmarch2009Ictmarch2009
Ictmarch2009
Leisure Solutions®
 
Extensia Bridge - Square 1 Infrastructure Tower Brokerage
Extensia Bridge - Square 1 Infrastructure Tower BrokerageExtensia Bridge - Square 1 Infrastructure Tower Brokerage
Extensia Bridge - Square 1 Infrastructure Tower Brokerage
Adrian Hall
 
TM Forum Case study handbook_2013
TM Forum Case study handbook_2013TM Forum Case study handbook_2013
TM Forum Case study handbook_2013
Locutus1of3
 
CHALLENGES AND IMPACTS CREATED BY “OVER-THE-TOP” (OTT) PLAYERS IN THE AFRICAN...
CHALLENGES AND IMPACTS CREATED BY “OVER-THE-TOP” (OTT) PLAYERS IN THE AFRICAN...CHALLENGES AND IMPACTS CREATED BY “OVER-THE-TOP” (OTT) PLAYERS IN THE AFRICAN...
CHALLENGES AND IMPACTS CREATED BY “OVER-THE-TOP” (OTT) PLAYERS IN THE AFRICAN...
adedolapo ILELABOYE
 
Keynote - Korea Telematics Market & Policy - SangMoo Lee
Keynote - Korea Telematics Market & Policy - SangMoo LeeKeynote - Korea Telematics Market & Policy - SangMoo Lee
Keynote - Korea Telematics Market & Policy - SangMoo Lee
mfrancis
 
Extensia Bridge consulting and advisory services
Extensia Bridge consulting and advisory services Extensia Bridge consulting and advisory services
Extensia Bridge consulting and advisory services
Adrian Hall
 
SMB – The forgotten majority of UC
SMB – The forgotten majority of UCSMB – The forgotten majority of UC
SMB – The forgotten majority of UC
Unified Communications Online
 
TSR 164 Derik Wagner
TSR 164 Derik WagnerTSR 164 Derik Wagner
TSR 164 Derik Wagner
Derik J. Wagner
 
Cd+Ds Me 2012 12 11
Cd+Ds Me 2012 12 11Cd+Ds Me 2012 12 11
Cd+Ds Me 2012 12 11
DE-CIX
 
Unlocking New Satcom Markets and Capabilities with Next-Gen Ground Segment
Unlocking New Satcom Markets and Capabilities with Next-Gen Ground SegmentUnlocking New Satcom Markets and Capabilities with Next-Gen Ground Segment
Unlocking New Satcom Markets and Capabilities with Next-Gen Ground Segment
ST Engineering iDirect
 
Airtel uriel
Airtel urielAirtel uriel
Airtel uriel
Abdul Santos
 

Similar to TowerXchange-Issue_12 (20)

TX_CALAProspectus_2017 copy
TX_CALAProspectus_2017 copyTX_CALAProspectus_2017 copy
TX_CALAProspectus_2017 copy
 
2016 Global Telco Innovation Targets from TC3 Summit 2015
2016 Global Telco Innovation Targets from TC3 Summit 20152016 Global Telco Innovation Targets from TC3 Summit 2015
2016 Global Telco Innovation Targets from TC3 Summit 2015
 
TX_Tecnorad_Issue15
TX_Tecnorad_Issue15TX_Tecnorad_Issue15
TX_Tecnorad_Issue15
 
Pacnet Story 20101108
Pacnet Story 20101108Pacnet Story 20101108
Pacnet Story 20101108
 
(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1
(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1
(2905) Telecoms World ME 2016 22 Page Prospectus v4 1.1
 
JULY06
JULY06JULY06
JULY06
 
VERIZON - CASE ANALYSIS
VERIZON - CASE ANALYSISVERIZON - CASE ANALYSIS
VERIZON - CASE ANALYSIS
 
Powering Safe and Reliable Railways telecommunication to support Middle East ...
Powering Safe and Reliable Railways telecommunication to support Middle East ...Powering Safe and Reliable Railways telecommunication to support Middle East ...
Powering Safe and Reliable Railways telecommunication to support Middle East ...
 
Investment pitch deck-v10
Investment pitch deck-v10Investment pitch deck-v10
Investment pitch deck-v10
 
Ictmarch2009
Ictmarch2009Ictmarch2009
Ictmarch2009
 
Extensia Bridge - Square 1 Infrastructure Tower Brokerage
Extensia Bridge - Square 1 Infrastructure Tower BrokerageExtensia Bridge - Square 1 Infrastructure Tower Brokerage
Extensia Bridge - Square 1 Infrastructure Tower Brokerage
 
TM Forum Case study handbook_2013
TM Forum Case study handbook_2013TM Forum Case study handbook_2013
TM Forum Case study handbook_2013
 
CHALLENGES AND IMPACTS CREATED BY “OVER-THE-TOP” (OTT) PLAYERS IN THE AFRICAN...
CHALLENGES AND IMPACTS CREATED BY “OVER-THE-TOP” (OTT) PLAYERS IN THE AFRICAN...CHALLENGES AND IMPACTS CREATED BY “OVER-THE-TOP” (OTT) PLAYERS IN THE AFRICAN...
CHALLENGES AND IMPACTS CREATED BY “OVER-THE-TOP” (OTT) PLAYERS IN THE AFRICAN...
 
Keynote - Korea Telematics Market & Policy - SangMoo Lee
Keynote - Korea Telematics Market & Policy - SangMoo LeeKeynote - Korea Telematics Market & Policy - SangMoo Lee
Keynote - Korea Telematics Market & Policy - SangMoo Lee
 
Extensia Bridge consulting and advisory services
Extensia Bridge consulting and advisory services Extensia Bridge consulting and advisory services
Extensia Bridge consulting and advisory services
 
SMB – The forgotten majority of UC
SMB – The forgotten majority of UCSMB – The forgotten majority of UC
SMB – The forgotten majority of UC
 
TSR 164 Derik Wagner
TSR 164 Derik WagnerTSR 164 Derik Wagner
TSR 164 Derik Wagner
 
Cd+Ds Me 2012 12 11
Cd+Ds Me 2012 12 11Cd+Ds Me 2012 12 11
Cd+Ds Me 2012 12 11
 
Unlocking New Satcom Markets and Capabilities with Next-Gen Ground Segment
Unlocking New Satcom Markets and Capabilities with Next-Gen Ground SegmentUnlocking New Satcom Markets and Capabilities with Next-Gen Ground Segment
Unlocking New Satcom Markets and Capabilities with Next-Gen Ground Segment
 
Airtel uriel
Airtel urielAirtel uriel
Airtel uriel
 

TowerXchange-Issue_12

  • 1. Tower Xchange Tower Xchange Plus: TowerXchange ranks the world’s top 110 towercos by tower count ISSUE 12 | April 2015 | www.towerxchange.com Journal of the telecom tower industry in EMEA, CALA and Asia TowerXchange CALA: < Peru: the next towerco land grab? < How Telesites and AT&T transform Mexico < SBA’s Bagwell on international growth TowerXchange Africa: < Latest on Telkom and MTN’s towers in SA < Unlocking the potential of Mozambique < MENA heats up: Zain selling towers TowerXchange Europe: < NEW! Europe tower counts and deal history < The unique structure of the UK tower market < Russian tower market: SLB frozen, BTS hot! TowerXchange Asia: < India special: Indus, Viom and Infratel < The third phase of the Myanmar rollout < Who has the flex to buy next in Indonesia? “We’re on a mission of operator disarmament” – Akhil Gupta, Chairman, Bharti Infratel
  • 2. www.towerxchange.com | TowerXchange Meetup | 11| TowerXchange Issue 12 | www.towerxchange.com2 (Chairman) Daniel Lee Managing Director Intrepid Advisory Partners Akhil Gupta Chairman Bharti Infratel Michel Faivre Directeur Programme Partage d’Infrastructure AMEA Orange Terry Rhodes Acting CEO Eaton Towers Marc Ganzi President, Digital Bridge & Mexico Tower Partners Arun Kapur Executive Chairman Irrawaddy Green Towers James Maclaurin formerly CEO edotco Areef Kassam Director of Infrastructure GSMA Mobile for Development Ayman Al Adl Director - TMT Standard Chartered Bank Chris Gabriel former CEO, Zain Africa Senior Adviser, Macquarie Group and Chairman, Clean Power Systems Chuck Green CEO Helios Towers Africa Suresh Sidhu CEO edotco Hal Hess EVP, International Operations and President, EMEA and Latin America American Tower Nobel Tanihaha President Director PT SOLUSI TUNAS PRATAMA (STP) Umang Das Chief Mentor Viom Networks Maria Scotti CEO Torrecom David Meganck Founder and COO Acsys Gary Staunton CEO Likusasa Group Laurentius Human Senior Director Corporate FInance Jabil Nina Triantis Managing Director, Global, Head of Telecoms & Media Standard Bank Kurt Bagwell President International SBA Communications Jim Eisenstein Chairman & CEO Grupo TorreSur Riana Donaldson Manager: International Network Operations Support Vodacom Bimal Dayal COO Indus Towers Inder Bajaj CEO Helios Towers Nigeria Tunde Titilayo Vice Chairman SWAP International Thorsten Schaefer CEO azeti Networks Jeffrey Eldredge Partner Vinson & Elkins Enda Hardiman Managing Partner Hardiman Telecommunications Ltd. Adeel Bajwa Senior GM of Legal Affairs and Contracts Warid Telecom With special thanks to the TowerXchange “Inner Circle” About TowerXchange TowerXchange is your independent community for operators, towercos, investors and suppliers interested in EMEA, CALA and Asian towers. We’re a community of practitioners formed to promote and accelerate infrastructure sharing. TowerXchange don’t build, operate or invest in towers; we’re a neutral community host and commentator on telecoms infrastructure. The TowerXchange Journal is free to qualifying recipients. We also provide webinars and regular meetups. TowerXchange monetizes this community through hosting annual Meetups and the sale of advertising, without compromising editorial integrity. TowerXchange was founded by Kieron Osmotherly, a TMT community host and events organizer with 16 years’ experience, and is governed with the support and advice of the TowerXchange “Inner Circle” – an informal network of advisors Our informal network of advisers: © 2015 Site Seven Media Ltd. All rights reserved. Neither the whole nor any substantial part of this publication may be re- produced, stored in a retrieval system, or transmitted by any means without the prior permission of Site Seven Media Ltd. Short extracts may be quoted if TowerXchange is cited as the source. TowerXchange is a trading name of Site Seven Media Ltd, registered in the UK. Company number 8293930.
  • 3. Contents Regular features 5 CALA tower counts, deals and news 15 Africa tower counts, deals and news 31 Asia tower counts, deals and news 38 Europe tower counts, deals and news 45 AMT versus SBA (versus everyone else!) 52 Top 110 towercos by tower count 70 122 216 154 CALA: Peru, Brazil & Mexico Plus SBA and Innovattel interviews NEW! Europe: market overview UK and Russia case studies Who’s who: innovations in RMS, ESCOs, structures and supply chains Africa: South Africa, Nigeria, Mozambique and MENA 75 Towerco perspectives: SBA and Innovattel 84 Peru: the next towerco land-grab? 98 Unique perspectives on Brazil’s towers 110 Telesites and AT&T shake up Mexico 123 TowerXchange’s intro to European towers 128 Unique structure of the UK tower market 129 Arqiva: the broadcast and telecom synch 141 Russia: SLB frozen, BTS hot! 216 Our famous directory of RMS and ILM firms 228 Towerco or powerco? 250 Rooftops, masts and towers 175 Asia: India, Indonesia and Myanmar 180 India: Infratel, Indus and Viom interviews 196 Indonesia: a closer look at the STP-XL deal 202 Detecon’s guide to South Asian towers 206 The next phase of the Myanmar rollout 27 South African towers for sale? 155 BCTEK lease up Nigerian police network 158 Unlocking the potential of Mozambique 167 MENA heats up: Zain selling towers www.towerxchange.com | TowerXchange Issue 12 | 3| TowerXchange Issue 6 | www.towerxchange.com3 TowerXchange Meetup calendar < TowerXchange Meetup Americas, April 28-29, 2015 < TowerXchange Meetup Africa, October 1-2, 2015 < TowerXchange Meetup Asia, November 24-25, 2015 < TowerXchange Meetup Europe, Q1, 2016 < TowerXchange Meetup Americas, June 13-14, 2016
  • 4. Africa’s leading, independent, telecom tower company HTA acquires, builds and manages wireless telecom infrastructure, leasing it to mobile network operators across Ghana, Tanzania and the Democratic Republic of Congo. HTA’s model of shared telecoms infrastructure, and its scale, helps to deliver improved efficiency and network quality and reliability for operators, reduced costs for users and increased accessibility. Find out more about our business www.heliostowersafrica.com
  • 5. TowerXchange’s analysis of the independent tower market in CALA 2015: a year of consolidation in Brazil, restructuring in Mexico, regulatory turmoil in Chile, growth in Peru and Central America… And what of Argentina? Q1-3 2014 was relatively quiet for the CALA tower industry if compared to the wave of transactions that took place in 2013. But the Brazilian market swung back into life in Q4 with SBA securing another (the last?) tranche of towers from Oi, and AMT deploying over US$2bn to acquire a large portfolio from TIM and to absorb BR Towers, a portfolio previously acquired through sale and leasebacks (SLBs) with Vivo and Oi and supplemented by BTS. With the majority of operator-captive towers now transferred to towercos, America Movil’s Claro towers notwithstanding, 2015 will be a year of consolidation in Brazil. AMT and SBA will concentrate on the novation of leases, update of asset registers and integration of acquired assets, and the number three towerco GTS refocusing on their own organic growth and international plans after their sale process in 2014 did not attract any satisfactory offers. Further tower deals in Brazil are more likely to come from trade acquisitions, as middle market towercos mature and are acquired, than from SLBs. It will be interesting to see whether the Lei das Antenas has any noticeable effect in 2015 on the notoriously complex and time-consuming permitting regime in Brazil, unlocking huge pent-up demand for build to suit towers in the country. 2015 will be an interesting year for Mexico. In fact, not only we are paying close attention to America Movil’s creation of a carve-out towerco in response www.towerxchange.com | TowerXchange Issue 12 | 5| TowerXchange Issue 12 | www.towerxchange.comXX American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 Telesites 10,800 6,185 3,496 8,412 1,163 457 498 Dominican Republic American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 6,185 3,496 8,412 1,163 457 498 Dominican Republic 1000 800 600 400 200 Continental* Centennial Torres U nidas M exico Tow er Partners T4U N M S*** 400 860 550 540 350 465 146 300 180192200209250 175 130 5874 4051 40 86 93 350 65 110 220 1k 400 100 Q M C ** CSSTorrecom BrazilTow er Com pany IIM T Innovattel**** H ighline do Brasil Teletow er D om inicana Z Sites IntelliSite Solutions Rede Sul Tocsa Phoenix Tow er International Torre O nline Skysites Telecom Torres American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 Telesites 10,800 6,185 3,496 8,412 1,163 457 498 Dominican Republic American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 6,185 3,496 8,412 1,163 457 498 Dominican Republic 1000 800 600 400 200 nental* tennial U nidas Tow er tners T4U M S*** 400 860 550 540 350 465 146 300 180192200209250 175 130 5874 4051 40 86 93 350 65 110 220 1k 400 100 Q M C ** CSS rrecom lTow er pany IIM T ttel**** o Brasilletow ercana Z Sites elliSitetions ede Sul Tocsa Tow er ional O nline kysites Torres American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 Telesites 10,800 6,185 3,496 8,412 1,163 457 498 Dominican Republic American Tower SBA Communications Grupo TorreSur 5,000 10,000 15,000 20,000 25,000 30,000 35,000 18,851 7,000 6,185 3,496 8,412 1,163 457 498 Dominican Republic 1000 800 600 400 200 Continental* Centennial Torres U nidas M exico Tow er Partners T4U N M S*** 400 860 550 540 350 465 146 300 180192200209250 175 130 5874 4051 40 86 93 350 65 110 220 1k 400 100 Q M C ** CSSTorrecom BrazilTow er Com pany IIM T Innovattel**** H ighline do Brasil Teletow er D om inicana Z Sites IntelliSite Solutions Rede Sul Tocsa Phoenix Tow er International Torre O nline Skysites Telecom Torres Estimated number of towers owned or managed by towercos in CALA Source: TowerXchange research, quarterly filings, site lists * Continental Towers owns a portfolio of ~1,000 towers across Colombia, Costa Rica, Panama, Nicaragua, Guatemala, El Salvador, Jamaica and Honduras ** QMC Telecom owns approximately 500 towers in Brazil, plus an unknown quantity in Mexico and Puerto Rico *** NMS owns 465 towers across Nicaragua, Mexico, Colombia and Peru **** Innovattel (Torresec) owns a portfolio of 209 towers across Puerto Rico, Colombia, Ecuador and Peru
  • 6. empowering communication effectively cost-efficient energizing communities Empowering tomorrow’s connected world www.edotcogroup.com Connectivity is at the core of everything we do. Providing first-of-its-kind regional accessibility, our telecoms infrastructure reach enables us to touch communities and expand communication businesses across Southeast Asia. Enabling connectivity for the future
  • 7. to regulatory pressure, but we are eager to track AT&T progresses now that it has acquired both Iusacell and Nextel Mexico. The U.S. giant will bring a breath of fresh air and capital to the country and definitely shake things up for Movistar, which could see its position as second Mexican carrier seriously threatened. In the meantime, all indications are that Telcel’s towers will be kept as close to the America Movil mothership as possible – Telcel has apparently transferred 10,800 towers to new towerco Telesites. Meanwhile, the rest of Mexico’s tower market resembles Brazil’s in that the majority of non- America Movil assets have been transferred to towercos, most the new build will be undertaken by towercos, and a growing layer of middle market towercos have entered the market – although few are mature enough to be subject to trade acquisitions as early as 2015. The Chilean tower market remains hindered by a regulatory regime that was supposed to help but certainly seems to be hindering the local tower industry and its investment in ICT infrastructure. Enterprising middle market towercos are making good progress in Peru and Central America, SBA Communications’ traditional stronghold. And what of Argentina? The ‘sleeping giant’ of the CALA tower industry is the region’s #2 mobile market, but remains sheathed in macro-economic turbulence and government policy that raises the spectre of nationalisation of assets. As such concerns gradually recede, expect the tower industry to heighten their ‘watching brief’ over Argentina in anticipation of www.towerxchange.com | TowerXchange Issue 12 | 7| TowerXchange Issue 12 | www.towerxchange.comXX Major tower transactions in Latin America 2011/2014 Date Q3 2013 Q4 2013 Q4 2013 Q4 2013 Q3 2014 Q4 2014 Q3 2013 Q2 2014 Q3 2013 Q2 2014 Q3 2013 Q2 2013 Q2 2013 Q3 2012 Q3 2012 Q1 2013 Q1 2013 Q4 2012 Q1 2013 Q4 2012 Q4 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q3 2011 Q2 2011 2011 Q1 2011 Seller Buyer Country USD/Tower Value in USDTower Sites Oi Oi Z-Sites Nextel American Tower TIM Nextel BR Towers* Nextel Oi SBA Communications SBA Communications American Tower American Tower Phoenix Tower Intl. American Tower American Tower American Tower American Tower SBA Communications Brazil Brazil Brazil Brazil Panama Brazil Brazil Brazil Mexico Brazil 343 million163 645 million 129 million 349 million N/A 1.2 billion 321 542 180 N/A 185 413 million 978 million 148 212 398 million 527 million 239 321 2,113 2,007 236 1,940 60 6,480 2,790 2,530+ 2,100 excl. rights 1,666 1,641 Global Tower Partners* Oi Oi American Tower Grupo TorreSur BR Towers US/Costa Rica Brazil Brazil 4.8 billion306 293 million138 251 million119 15,700 2,113 2,113 Telefonica Telefonica BR Towers American Tower Brazil Brazil 252 million 33 million 132 172 1,912 192 Axtel Telefonica American Tower American Tower Mexico Brazil 250 million 18 million 283 190 883 93 Telefonica Sitesharing Torres Unidas BR Towers Chile Brazil N/A N/A N/A N/A 400 100+250 BTS Telefonica SBA Communications Brazil 178 million223 800 Oi Grupo TorreSur Brazil 258 million214 1,208 Telefonica American Tower Brazil 225 million150 1,500 Telefonica Telefonica Telefonica Telefonica Millicom Telefonica Sitesharing American Tower American Tower American Tower American Tower American Tower Grupo TorreSur American Tower Chile Mexico Mexico Colombia Colombia Brazil Brazil 96 million 323 million 122 million 18 million 182 million 206 million 585 million 172 208 209 144 85 159 879 558 1,554 584 125 2,126 1,358 666 * company acquisition Special thanks to Jonathan Atkin, Managing Director at RBC Capital Markets for his contribution
  • 8. www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com8 country risk dropping below the threshold required for tower investment, possibly as soon as 2016/17. There is plenty of capital flowing into CALA towers - the three major transactions of 2014, AMT-BR Towers, SBA-Oi and AMT-TIM, represented a total of US$2.7bn in deployed capital, compared to just under US$3bn spent in total over eleven transactions we reported in 2013 (not counting the AMT-GTP deal, which was US-centric). We may be entering a period where trade acquisitions will be as common as SLB deals, with several parties seeking assets in Brazil and Mexico. The premium paid for a buy and leaseback from a CALA carrier shows no sign of abating, average cost per tower having risen from US$128k in 2010, US$148k per tower in 2011, US$169k in 2012, US$188k in 2013 and US$213k per tower in 2014. It is also notable that trade acquisitions come at an even higher premium, which makes sense given that the towers concerned are typically newer, have more wind load  capacity, and their lease agreements more suited to co-location. The fact that Brazilian towers are almost “sold out” suggests attention may be diverted to trade acquisitions or diverted outside Brazil for towercos seeking to extend their growth narrative. TowerXchange is currently tracking potential new market entrants in Colombia, Chile and Peru, especially since SBA Communications has hinted at new markets being on their radar. Although unsure of what SBA’s next move will be, we are confident the U.S. giant will pick among these three countries LatAm towerco breakdown by country AMT Costa Rica Peru Chile Brazil Mexico Colombia Andinas Ecuador Peru Chile Colombia Brazil Continental Guatemala El Salvador Jamaica Honduras Nicaragua Panama Costa Rica Colombia Colombia Colombia Colombia Colombia Colombia Innovattel Ecuador Puerto Rico Puerto Rico Peru QMC Brazil Mexico SBA Guatemala Guatemala El Salvador Nicaragua Nicaragua Nicaragua Panama Panama Panama Costa Rica Costa Rica Costa Rica Brazil Brazil Brazil Torrecom Mexico Mexico Mexico Torres Unidas Phoenix Tower Int. Centennial NMS Peru Peru Chile Towercos focusing on a single country Brazil: GTS, Highline, CSS, T4U, Skysites, Telecom Torres, Z Sites, Rede Sul, Torre Online Mexico: MTP, IIMT, Intelli Site Solutions, Telesites Panama: Torres de Panama Dom. Rep: Teletower Dominicana Costa Rica: Catalina Inc., Tocsa
  • 9. 800.487.SITE sbasite.com © 2015 SBA Communications Corporation. All Rights Reserved. The SBA logo, Your Signal Starts Here, Building Better Wireless and SBA Sites are all registered trademarks owned by SBA Telecommunications, Inc. and affiliated SBA companies. Our clients depend on SBA to provide the wireless infrastructure that allows them to transmit the signal to their customers. As their first choice provider of wireless infrastructure solutions, we are continuously setting the standard for customer satisfaction by “Building Better Wireless”. IN OUR BUSINESS, IT IS ALL ABOUT THE SIGNAL. FLORIDA HEADQUARTERED. INTERNATIONALLY CONNECTED. TOWER OWNERSHIP LEASING SITE MANAGEMENT SITE DEVELOPMENT CONSTRUCTION
  • 10. which, as of now, have the best growth potential in the region, outside of Brazil and Mexico. In the meantime, we have speculated on potential market openings in Argentina, especially since Nextel is likely to be sold over the next few weeks. To date, the two likely buyers appear to be private equity firms Optimum Capital and Kingsley Capital but there could be other likely acquirers lined up for the troubled carrier. Argentina is a troubled country with a risky outlook and an entry into its telecom industry will surely require bold entrepreneurship and a flair for challenges. On the towerco side, we could expect middle market, independent towercos to initiate a market opening process but we doubt organisations such as AMT and SBA will comfortably navigate those waters anytime soon. In conclusion, the CALA region remains a very diverse region, as clearly shown in the heatmap TowerXchange created. Countries like Bolivia, Venezuela and Paraguay have seen very little or zero towerco activity and we will keep a very close eye and report on any movement towards the creation of new regional towerco markets www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com10 Latin America Heatmap 16 different CALA towercos have already confirmed their participation in the 2nd Annual TowerXchange Meetup Americas, taking place in Hollywood, FL, 28-29 April 2015, in co-location with PCIA’s Wireless Infrastructure Show. Contact me for further information at: aneri@towerxchange.com Towercos have acquired the majority of towers from carriers Towercos have acquired a significant proportion of towers from carriers, but the majority remain carrier-owned. Significant BTS towerco activity also present Less SLB activity, but plenty of BTS towerco activity Early stage market for BTS and/or SLB Negligible towerco activity Legend Source: TowerXchange
  • 11. América Móvil creates Telesites On April 1, América Móvil has filed a report with the plan for the creation of its spin off towerco Telesites, to which it will transfer 10,800 towers. Industry news suggest that other Mexican carriers will have access to 91% of the country’s sites, compared to the current 45%. Telcel will of course be the anchor tenant. The restructuring plan is expected to be approved at the company’s shareholders meeting scheduled for April 17 and the spin-off should be concluded before the end of June 2015. Digicel on the new Bahamian network Frank O’Carroll, Digicel’s Head of Business Development, has recently stated that the six-month deadline set by the Bahamian government to rollout and launch network services was tough to achieve. Another requirement set by the government refers to the wide ownership, according to which new operators must be majority Bahamian-owned. In the meantime, Digicel is planning to build between 200-300 new towers and invest approximately US$200mn for the new network. Second Bahamian operator to be partially State-owned In recent news, Telegeography reported that the new licensee, called NewCo, is 51% owned by the government and it will retain equity until a sale to private Bahamian investors can be organised. The Chairman of the opposition party FNM Michael Pintard stated that “It is conceivable that the government, [which] has a huge stake in the present telecommunications company and…will be the majority shareholder in the new company, can fix prices and disadvantage the consumer…It opens the doors for any number of backdoor deals and the government ought to ensure there is transparency in this entire process.” Claro Honduras launches 4G LTE The Comision Nacional de Telecomunicaciones (Conatel) has celebrated the launch of the second 4G LTE network by Claro Honduras. The new network will be available in large cities such as Tegucigalpa, San Pedro Sula and La Ceiba. According to license conditions, the coverage is expected to reach fourteen cities in 2016. www.towerxchange.com | TowerXchange Issue 12 | 11| TowerXchange Issue 12 | www.towerxchange.comXX Telefonica not entering Honduras, Paraguay or Bolivia In a recent conference call with investors, Telefonica’s CEO Cesar Alierta has denied any interest in entering new LatAm markets. The CEO stated that Telefonica is not entering Honduras, Paraguay or Bolivia and that the current focus is on growing the company’s presence in existing markets. Nokia involved in VoLTE and small cell for Avantel Avantel has appointed Nokia Solutions to develop VoLTE services with initial rollouts expected in Bogota, Medellin, Cali, Barranquilla and Bucaramanga. Nokia has also developed Avantel’s Flexi Zone LTE small cell solution which is considerably improving the operator’s capacity and coverage. Une-EPM/Tigo expanding LTE footprint Une-EPM and Tigo Colombia, which merged a few months ago, have reached LTE coverage of 75 cities in Colombia. According to a recent statement by the CEO, Esteban Iriarte “In 2014 we invested in the improvement, modernisation and expansion of our fixed and mobile telecoms infrastructure … we deployed more than 2,800km of fibre and expanded the capacity of our submarine cables and national transport network.” Mexico Bahamas Bahamas Honduras CALA news A roundup of tower news across Central and Latin America Honduras Colombia Colombia
  • 12.
  • 13. appealing the decision, according to national news. US$1.16bn to be invested in fibre-optic The Minister of Transport and Communications, Mr José Gallardo Ku, recently stated that over five million citizens will benefit from the fibre-optic project currently being developed, which will reach 6,411 locations thanks to 31,716km of fibre. Twenty-one tenders are scheduled over the next two years with an estimated investment of US$1.16bn. Claro expands footprint to rural areas Claro is extending its 3G footprint to 181 remote areas in Chile, reaching out to as many as 46,880 people. The move is complying with the minimum requirements set in the LTE license granted to the operator. According to Claro’s General Manager, Mr Mauricio Escobedo, the company is now embarking “on a new phase with the delivery of voice services in rural locations throughout Chile.” PT transfers millions of Oi shares to new entity Portugal Telecom SGPS has recently transferred 47.435 million common shares and 94.87 million preferred shares issued by Oi to a company registered in the Netherlands under the name of Portugal Telecom International Finance BV. The transfer was approved by the Board of Directors in March and Oi has released a statement announcing that “PT Finance is an indirect wholly owned subsidiary of Oi and, therefore, the shares transferred by PT SGPS to PT Finance will Telefonica de-values its Venezuelan assets Telefonica is writing down the value of its Venezuelan assets in light of the crisis of the Bolivar Fuerte, the national currency. Profits will be written down for as much as €1.23bn. The assets include considerable profit that the national government isn’t allowing Telefonica to take out of Venezuela, as reported by the Wall Street Journal. Movistar to invest in 4G LTE Movistar Ecuador will invest as much as US$150mn to deploy 3G infrastructure as well as its 4G LTE network. The company has recently been awarded extra spectrum which includes frequencies in the 1,900MHz band. New regulator starts acting Ecuador has a new telecom regulator which was formed earlier this year, the Agency for Regulation & Control of Telecommunications (Arcotel). Arcotel will combine functions of various existing regulatory bodies and will operate in cooperation with the Ministry of Telecommunications & Information Society. The Agency is responsible for managing, regulating and controlling telecoms and radio spectrum in Ecuador. Movistar Peru ordered to pay past taxes Movistar Peru has been ordered to pay US$500.9mn to SUNAT, the national tributary agency, in taxes dated 2000-2001. The operator is looking at www.towerxchange.com | TowerXchange Issue 12 | 13| TowerXchange Issue 12 | www.towerxchange.comXX be considered, as the case may be, treasury shares.” Vivo plans public share offering After receiving approval to acquire Global Village Telecom (GVT), Vivo is planning to hold a public share offering which will help finance the deal. Telefonica has recently purchased GVT for US$9.83bn and, as requested by Anatel as a condition to approve the acquisition, has waived its voting rights linked to its stake in Telecom Italia. Telegeography recently reported that Telefonica has lined up nine banks to run its US$3.25bn capital increase. The institutions involved in the deal are UBS, Morgan Stanley, JP Morgan, Bank of America Merrill Lynch, Barclays, HSBC, BBVA, CaixaBank and Santander. Oi and TIM to share 2G/3G network A 2G and 3G network sharing agreement between Oi and TIM Brasil has been approved by the Brazilian regulatory authority Conselho Administrativo de Defesa Economica (CADE). The deal will allow the operators to share networks in areas with population of less than 30,000 people. NII Holdings agrees to sell Nextel Argentina Private equity firms Kingsley Capital and Optimum Capital have reportedly reached an agreement with NII Holdings for the acquisition of Nextel Argentina. Details of the deal are yet to be announced Chile Ecuador Ecuador Venezuela Peru Brazil Brazil Brazil Peru Argentina
  • 14.
  • 15. TowerXchange’s analysis of the independent tower market in Africa African towers 2015: deal flow slowing but some significant assets still to be acquired www.towerxchange.com | TowerXchange Issue 12 | 15| TowerXchange Issue 12 | www.towerxchange.comXX 2014 concluded with independent towercos owning close to 30% (or 47,600) of Africa’s towers. In 2015 the rate of asset transfer will slow but there are still some significant deals to be done across the continent. We anticipate that the balance of the Airtel assets (a further 2,000 towers) will be sold in early 2015. Our research suggests the transactions are pending regulatory approval only, with announcements imminent involving the transfer of Airtel’s towers in Gabon to Helios Towers Africa Figure 1: Estimated number of towers owned or managed by towercos in Africa and in Madagascar to Eaton Towers. Airtel are set to retain their towers in Sierra Leone. In further deals, we anticipate the sale of MobiNil’s ~3,500 towers in Egypt to take place in H1 2015, with Eaton Towers believed to be the successful bidder in the process. Processes involving Sonotel’s assets in Senegal, Mali and the Guineas are also underway and expected to complete in Q4 2015-Q2 2016. Furthermore, Telkom’s RFP for the sale of ~6,000 shareable structures (including around 3,500 GBTs) in South Africa has sparked rumours that MTN’s assets in the country will also come to market in 2015, which could see a further ­~10,000 towers, representing 60% of the tower stock in the South African market, transferring to towerco ownership in the next 12 months. With these new sales, the Airtel deal triggering follow-on deals, and with towercos growing 10-15% per annum organically by building the majority of the continent’s new towers, we’re sticking to our forecast that towercos will own 46.9% of Africa’s towers by year end 2015. That will represent the vast majority of the towers owned by credit worthy anchor tenants – the addressable market for towercos in Africa may be 55-60%. The size of Africa’s tower industry doubled in two quarters, triggered by Airtel’s sale of towers in 16 of their 17 African countries (sales of 4,800 towers to American Tower, 3,500 to Eaton, 3,100 to Helios Towers Africa and 1,113 to IHS have been announced to date). The sale of Airtel’s Nigerian Towers, recently secured by American Tower, stimulated two other deals in Africa’s most lucrative mobile market, both of which were closed before the Airtel deal; Etisalat Nigeria sold 2,136 of their ~2,700 towers to IHS, while MTN sold all 9,151 of their Nigerian towers to the same counterparty, retaining a 51% stake in the joint venture. Almost US$5bn of PE-backed towerco’s investors and American Tower’s money is now at work in the African tower sector, not including substantial Source: TowerXchange IHS Africa 5000 10000 15000 20000 25000 Helios Towers Africa American Tower Eaton Towers SWAP Technologies Helios Towers Nigeria 1900 1500 1400 1600 700 509 250 1300 170 800 500 400 500 500 500 4500 300 200 2038 1918 1256 2230 734 1648 38014222 4800 South Africa Nigeria Ghana Burkina Faso DRC Cote d’Ivoire Cameroon Niger Rwanda Zambia Congo B Chad Unknown Country Uganda Tanzania Malawi
  • 16. When it comes to telecoms experience, we’re at the top. For over 20 years, we’ve designed, supplied and installed thousands of telecom structures around the world, and we can do the same for you – and more. We can also help you cool your equipment room while helping you cut energy costs with our Monitor free-cooling system. Contact us today to see what we can do for you. www.alifabs.com +44 (0)1653 602890 +44 (0)1483 611999
  • 17. infrastructure sharing) < Square1 Infrastructure (Nigeria and South Africa) < TASC (targeting MENA) < TowerCo of Madagascar < Tower share (targeting MENA) www.towerxchange.com | TowerXchange Issue 12 | 17| TowerXchange Issue 12 | www.towerxchange.comXX Source: TowerXchange Source: TowerXchange equity stakes retained by MTN, Millicom and Vodacom. Sub-Saharan Africa has graduated to a new class of investor, and the price of participation in this maturing asset class is now likely well over US$100mn. Many commentators feel the three PE-backed members of Africa’s ‘Big Four’ towercos have now achieved the necessary diversification of country and counterparty risk to commence the final phase of integration and consolidation in the run up to trade sale or IPO. While a glance at Africa’s tier one MNO’s remaining tower portfolios suggest a finite amount of investible assets remain operator-captive (see “What’s left?” In issue 11 of TowerXchange), TowerXchange forecast that the Airtel deal will trigger a handful of follow-on deals in 2015 Figure 1a: Count differentiating towers that are owned from those that are managed and marketed by towercos Unfilled bars = Managed and marketed towers Filled bars = Owned Towers Figure 2: Africa's regional and prospective new entrant towercos TowerXchange are tracking several towercos who are active in or targeting Africa (there are a couple more, but we’re not at liberty to disclose them!): < Atlas Towers (South Africa) < BCTEK (Nigeria) < Communication Towers Nigeria < Frontier Tower Solutions (targeting Burundi) < Hotspot Network Limited (Nigeria) < Infratel (South Africa) < Pro High Site Communication (South Africa) < Shared Networks Tanzania (active TowerXchange estimate that these towercos own or operate a total of around 2,000 African towers. 19000 2000 700 5000 10000 15000 20000 25000 700 759 800 700 7800 10012 4370 “ “ the three PE-backed members of Africa’s ‘Big Four’ towercos have now achieved the necessary diversification  of country and counterparty risk to commence the final phase of integration and run up to trade sale or IPO
  • 18. eManager by Flexenclosure Operation Property Site logistics Engineering Local server Dew Point 0.1 Normal Local Server Humidity 22.8 Low Local Server Pressure 991.8 Rather Low Local Server Humidity 23.1 Low Local Server Temperature 21.6 Rather low Local Server Temperature 22 Low Local Server CPU 1 Load 43 High Local Server CPU 2 Load 40 Moderate Local Server Physical Memory 31815 Info=Job execution started Information Discover and Connect Info Info=Device is online Information Local Server (SNMP) Notice Status=21, Comment=Online Status Changed Local Server (SNMP) Notice Info=Device is offline Information Local Server (SNMP) Notice Status=20, Comment=Offline Status Changed Local Server (SNMP) Notice Info=Disconnection detected Information Local Server (SNMP) Warning Temperature 21.8 Humidity 24.4 Computed value 0.6 Temperature Limit low -200.0 Temperature Limit High 300.0 Humidity Limit Low 5.0 Humidity Limit High 100.0 Computed Value Limit Low -50.0 Computed Value Limit High 80.0 Temperature alarm delay 20 Humidity alarm delay 30 Computed value alarm delay 30 Temperature hysteresis 1.0 Humidity hysteresis 1.0 Computed value hysteresis 0.1 Temperature *10 218 Data Event Level Network Overview 0.25 20.00 00.00 04.00 08.00 12.00 16.00 0.50 0.75 1.00 1.25 1.50 Business Control 0.25 20.00 00.00 04.00 08.00 12.00 16.00 0.50 0.75 1.00 1.25 1.50 d Connect Info rver (SNMP) Notice Serverrver (SNMP) Notice al Server (SNMP)MP) Notice ocal Server (SNMP) Notice LoLocal Server (SNMP) Warning L lLevelvel 00.00 04.00 08.0008.00 12.00 16.00 in
  • 19. www.towerxchange.com | TowerXchange Issue 12 | 19| TowerXchange Issue 12 | www.towerxchange.comXX Jan-2010 Millicom / Tigo Ghana HTA 750 $54mn for 60% Joint venture$120k $307k* $228k Oct-2010 Feb-2010 Vodafone Multilinks Ghana Nigeria Eaton HTN 750 400 Not applicable Unknown Manage with license to lease Manage with license to lease Dec-2010 Cell C South Africa American 1,400* $430mn Sale and leaseback Dec-2010 Starcomms Nigeria SWAP 407 $81m Sale and leaseback Dec-2010 MTN Ghana American 1,876 $218.5mn for 51% Joint venture Dec-2010 Dec-2010 Millicom / Tigo Millicom / Tigo Tanzania DRC HTA HTA 1,020 729 $80m for 60%** $45mn for 60%** Joint venture Joint venture$103k $131k Dec-2011 Aug-2010 MTN Visafone Uganda Nigeria American IHS 1,000 800 $89m for 51% $67mn Joint venture Sale and leaseback $175k $84k Mar-2012 Orange Uganda Eaton 300 Unknown Sale and leaseback Mar-2012 Apr-2013 Warid Telecom Orange Uganda Cameroon & Cote d’Ivoire Eaton IHS Africa 400 2,000 Unknown N/A Sale and leaseback Manage with license to lease Oct-2012 MTN Cameroon IHS Africa 827 $143m Sale and leaseback$173k Oct-2012 Jul-2013 Jun-2013 Jul-2014 Sep-2014 Dec-2014 May-2014 Aug-2014 Sep-2014 Nov-2014 MTN Vodacom Telkom Kenya*** Airtel MTN Airtel MTN Etisalat Airtel Airtel Cote d’Ivoire Tanzania Kenya Tanzania, DRC, Congo B & Chad tbc Nigeria Zambia & Rwanda Rwanda & Zambia Nigeria Ghana, Niger, Burkina Faso, Kenya, Uganda & Malawi tbc Nigeria IHS Africa HTA Eaton HTA IHS Africa IHS IHS IHS Eaton American 931 1,149 1,000 3,100 9,151 1,113 2,136 3,500 4,800 1,269 $141m ~$75mn for 75.5% N/A ~$400-500mn $882mn for 49% ~US$181mn Unknown $470-500mn ~$525-700mn $1,050mn Sale and leaseback$151k Joint venture Manage with license to lease $65k Sale and leaseback$145k $227k Joint Venture Sale and leaseback $197k $163k Sale and leaseback Sale and leaseback Sale and leaseback Sale and leaseback $175k $219k *Cell C deal included 1,400 existing towers plus 1,800 towers to be constructed **Millicom/Tigo’s stake in Helios Towers Tanzania reduced to 24.5% after Helios acquired towers from Vodacom Tanzania in 2013 ***Telkom Kenya-Eaton deal subsequently cancelled Figure 3: Africa’s biggest tower sharing transactions to date Year Operator Country TowerCo Est. # of towers Publicly stated purchase price Deal structureCost per tower Source: TowerXchange $199k Figure 4: African tower industry achieves launch velocity End of Year Est total # of towers in Africa Est # of African towers owned or operated by towercos % of African towers owned by towercos 2009 120,000 100 0.001% 2010 125,000 6,000 4.7% 2011 130,000 9,000 6.9% 2012 140,000 16,661 11.9% 2013 150,000 *25,510 17% 2014 165,000 47,500 29% 2015(f) 180,000 84,500 46.9%
  • 20. LEBANON ALGERIA DR CONGO MYANMAR BURKINA FASO ETHIOPIA RWANDA CONGO CAMEROON GHANA UGANDA SOUTH SUDAN Fiber Optics MV,HV& E HV Network Manage d Services NetworkD eployment SERVICES A leading provider of infrastructure solutions global picture. local insights info@ieng-group.com | www.ieng-group.com Quality ISO 9001 Health & Safety OHSAS 18001EMPLOYEES 700 ISOCERTIFIED SITES UNDER MANAGEMENT 3008 Design, Engineering & Construction Mast & Tower Solutions Network Equipment Installation Commissioning & Swap-out Power Supply Site Planning, Acquisition & Property Services Testing & Commissioning Procurement, Logistics & Warehouse Management Operations & Maintenance Telecommunications and Power Services
  • 21. Source: TowerXchange Cameroon Cote d’Ivoire Rwanda Zambia Tanzania Chad Congo Brazzaville DRC Kenya Niger Burkina Faso Malawi South Africa Uganda Ghana Nigeria IHS American Tower Helios Towers Africa Eaton Towers HTN & SWAP www.towerxchange.com | TowerXchange Issue 12 | 21| TowerXchange Issue 12 | www.towerxchange.com20 Figure 5: Forecast African towerco footprints Please feel free to contact the TowerXchange team Kieron Osmotherly Founder & CEO E: kosmotherly@towerxchange.com M: +44 7771 148001 For editorial & speaking enquiries regarding Americas: Arianna Neri Head of Americas & Asia E: aneri@towerxchange.com M: +39 338 111 2103 For editorial & speaking enquiries regarding Africa or Europe: Frances Rose Head of EMEA E: frose@towerxchange.com M: +44 7793 045718 For editorial & speaking enquiries regarding Asia: Ian Ferguson Head of Asia E: iferguson@towerxchange.com M: +44 (0)7908175087 For advertising opportunities & event participation: Annabelle mayhew Chief Commercial Officer E: amayhew@towerxchange.com M: +44 7423 512588 Toya Smith Business Development Manager E: tsmith@towerxchange.com M: +44 7967 441110 For media partnerships & to request additional subscriptions: Harpreet Sohanpal Head of Marketing E: hsonanpal@towerxchange.com For the designers of the TowerXchange Journal & brand: Jon Whitty Senior Designer & Brand Development E: jon@blacklightdesign.co.uk The TowerXchange Journal is published by Site Seven Media Ltd. © 2014 Site Seven Media Ltd. All rights reserved. Neither the whole nor any substantial part of this publication may be re-produced, stored in a retrieval system, or transmitted by any means without the prior permission of Site Seven Media Ltd. Short extracts may be quoted if TowerXchange is cited as the source. TowerXchange is a trading name of Site Seven Media Ltd, registered in the UK. Company number 8293930.
  • 22. Vertical Anchorage Line System www.karam.in customercare@karam.inE-mail ID : SAFE ANCHORAGE SOLUTIONPROVIDING SAFE ANCHORAGE SOLUTION FOR HEIGHT SAFETY IN TELECOM INDUSTRY Ref. VERTEX PN 8000 Vertical Anchorage Line System on Rigid Aluminium Rail Ref. VERTEX PN 7000 Vertical Anchorage Line System on Rigid Cable Line Ref. VERTEX PN 9000 Vertical Anchorage Line System on Rigid Aluminium Rail
  • 23. Botswana – Vodafone Group and Botswana Telecommunications Corporation Limited (BTC) have signed a new Partner Market agreement. The agreement will allow BTC to access Vodafone’s global data reach and offer customers a competitive cost base and Vodafone will be given access to BTC’s extensive local network. Ghana – MTN Ghana has unveiled plans to invest GHS460 million (US$122 million) in network improvement work in 2015, following infrastructure investments of GHS311 million in 2014. MTN Ghana has deployed an additional 112 3G BTS in the last few months. MTN’s tower network in Ghana is managed by a joint venture tower company with American Tower. Cameroon – State-owned operator CamTel is preparing to deploy a mobile communications network after being awarded a wireless license in September 2014. In addition MTN and Orange Cameroon have received permission to launch 3G and 4G services which will open up competition with Viettel Cameroon’s high speed data offering. Zimbabwe – As the row over infrastructure sharing, particularly in relation to market leader Econet’s network continues, the government’s latest plan is to create an entity to take control of the country’s telecoms infrastructure. www.towerxchange.com | TowerXchange Issue 12 | 23| TowerXchange Issue 12 | www.towerxchange.com22 Their aim is to see one independent company setting up infrastructure to end any debates about ownership and to promote competition on service levels rather than network coverage. Senegal – Ericsson has signed a contract with Tigo Senegal to manage and maintain Tigo’s network and technical capabilities. Although Ericsson will take over responsibility for operational management, Tigo will retain control over strategic issues such as ownership of equipment, network development and investment strategy. Nigeria, Ghana and Uganda – A changing of the guard at American Tower in Africa will see Francois Van Zyl moving from Cell C to become CEO of ATC Ghana. Thomas Sonesson will move from Ghana to take over as CEO of ATC Uganda as the previous Ugandan CEO Gordon Porter will head up the new ATC Nigeria. South Africa – Cell C has announced a planned investment of ZAR8 billion (UD$667.2 million) to fund LTE roll-out in targeted areas in South Africa over the next three years. The strategy will be to target highly populated metropolitan areas. Huawei and ZTE have been engaged as primary partners in the rollout which will cover some 4,000 sites. Africa News South Africa – More detail is emerging of the Telkom tower sale process, incorrectly rumoured to have been discontinued in one media outlet. It seems Telkom only wants to sell a small proportion of their macro towers, while they are seeking that the same counterpart manage the balance of their tower assets. South Africa/Africa – TowerXchange believes that Vodacom Group would be open to sharing network infrastructure with competitors Millicom and Bharti Airtel, in order to reduce costs related to O&M as well as for future network deployments. This represents a new way of approaching infrastructure sharing in Africa, where the towerco-led ‘Sale and Leaseback’ model is more prevalent. This plan would see Bharti Airtel, Millicom and Vodacom sharing infrastructure in the markets they have in common, such as Tanzania and DRC. Zambia – Huawei has won a contract to build new telecom infrastructure in Zambia, as part of a US$65 million initiative to increase connectivity. The towers will be used by all three Zambian mobile operators and will be overseen by the Zambia Information and Communication Technology Authority (ZICTA), the country’s telecom regulator. Nigeria – RIHS has been licensed by the Nigerian Communications Commission (NCC) to improve broadband services in the northern central states of the country. According to rumours, IHS will focus on urban areas in this
  • 24.
  • 25. region, where there is currently no broadband provision and very limited mobile internet Mali – The government is said to be considering the possibility of tendering for a fourth mobile operator later in 2015. While Alpha Telecom has begun to deploy infrastructure they have hit many roadblocks, to the point where in November 2014 it was revealed that a prosecutor for the Ministre de l’Economie et des Finances had begun an investigation into their license. This delay has led the government to investigate the possibility of issuing a further concession to another company once the block on licensing lifts later this year. Africa – Rumours in TMTfinance that IHS is already gearing up for an IPO are premature. All three private equity backed African towercos, Helios Towers Africa, Eaton Towers and IHS, will ideally need two to three years’ trading history at scale before having a realistic option to list. 2015 and 2016 will be about integrating and consolidating their acquisitions, IPOs or trade sales are unlikely to occur until 2017 given the time lapse between announcing and closing deals www.towerxchange.com | TowerXchange Issue 12 | 25| TowerXchange Issue 12 | www.towerxchange.comXX Tower Xchange Meetup Africa 2015 1-2 October, Johannesburg IHS reports 130% EBITDA growth in FY2014 Annual report of lead investors Wendel Group reveals key financial metrics of IHS's meteoric rise IHS’s recent acquisitions in Rwanda, Zambia and Nigeria have launched the company into the top ten biggest towercos globally. Now managing in excess of 23,000 towers across Africa (pro forma with the acquisition of MTN’s Nigerian towers), the company has grown by 130% (both in terms of EBITDA and number of towers under management) over the last year and has increased the number of towers under management fourfold over the last two years. In 2014 IHS acquired more than 13,000 towers of which 8,000 have already been integrated. This includes 1,300 towers from MTN in Rwanda and Zambia (consolidated in April and May 2014), 2,100 towers from Etisalat Nigeria (consolidated in November 2014), 9,100 towers from NTN in Nigeria (of which 4,150 were consolidated in December 2014 and the remainder will be consolidated in H1 2015), resulting in revenue almost doubling to $312.4 million before pass-through of diesel costs to tenants. IHS was successful in increasing the rate of co-location on existing sites and reducing energy costs and is partnering with key MNOs to improve lease up rate, resulting in EBITDA advancing to $100.8mn in 2014, representing a margin of 32.3%. The acquisition of towers from MTN in Zambia and Rwanda and the Nigerian tower acquisitions were financed by a capital raises including US$550 million in March and April 2014, a premium of 30% on the previous capital raise in July 2013. Then in November 2014 IHS announced it was raising a further US$2.6 billion to support this growth, including US$600 million in the form of a credit facility and US$800 million credit to fund the IHS/MTN joint venture in Nigeria. The debt component of US$600 million was fully under-written and is split between USD and Naira and has a seven year tranche and an eight year tranche. Of this tranche of funds, lead shareholder Wendel has committed to investing an additional US$503 million in additional equity, bringing its total investment in IHS Holding to US$779 million. In addition Wendel has brought together four US and European family investors (including FFP, Sofina and Luxempart) to co-invest in IHS, meaning that Wendel has raised an additional US$181 million through an IHS co-investment vehicle managed by Wendel. Once these two tranches of investment are complete, Wendel will own c. 26% of the share capital directly and will represent 36% of the voting rights. IHS also attracted additional first tier investors in 2014 including the sovereign wealth funds of Singapore and South Korea (GIC and KIC), AIIM (Macquarie and Old Mutual) and Goldman Sachs. IHS has now raised a total of US$4.5 billion since 2012 and has deployed the funds in establishing market- leading positions in Nigeria, Cameroon, The Ivory Coast, Zambia and Rwanda. In addition to IHS’s most recent acquisitions in Rwanda, Zambia and Nigeria, they are also planning new site build programmes across the IHS footprint and to invest in greener, more sustainable power solutions across their portfolio
  • 26. Your safety is our mission The industry leader in tower climber safety The industry leader in tower climber safety National Association of Tower Erectors 605-882-5865 • 888-882-5865 (U.S.) www.natehome.com 605-882-5865 • 888-882-5865 (U.S.)
  • 27. Last of the SSA land-grab; reigniting competition for South Africa’s towers Following Telkom’s RFP, MTN are rumoured to be again considering bringing their towers to market. Who will succeed in securing Africa’s most profitable market? The South African towerco market Towercos own just 10% of South Africa’s estimated 22,288 telecom towers, making the country the least penetrated of SSAs attractive tower markets. To date two of Africa’s ‘Big Four’ towercos control assets in the country – Eaton Towers has built over 170 towers with a pipeline of several hundred more and a tenancy ratio north of two, and American Tower markets 1,918 towers, 1,400 of which were acquired from Cell C back in 2010 in a US$430mn deal which at the time was reported to include up to 1,800 towers to be constructed, the majority of which have evidently not been built. In addition several ‘middle market’ towercos operate in the South Africa including Square1 Infrastructure and Atlas Tower. The South African market is one of the most attractive telecom markets in SSA with 148% SIM penetration, of which 35% are 3G and 4G (source: GSMA Intelligence, Q4 2014) and, given wireline penetration stands at just 9%, growth in data consumption is likely to occur mainly in the mobile market. ARPU is around US$8. South African operator landscape Vodacom is the leading operator in South Africa with 31.5mn subscribers, supported by around 7,000 towers across the country. Leading the market in South Africa for many years, their market share has remained fairly stable despite shake ups from new market entrants. Vodacom denied interest in selling their South African towers as recently Read this article to learn: < The current status of the South African operator market < Which towers will be involved in a potential divestment < Imperatives and drivers in the South African market < How tower assets are currently distributed in South Africa Now that Telkom have issued an RFP for the sale of some of their 6,000 shareable structures and MTN are rumoured to be considering bringing their passive infrastructure assets to market in late 2015, it seems likely that a substantial opportunity is about to open up in Africa’s most investible tower market. TowerXchange reviews the telecoms and tower landscape and looks at who is likely to make a play for South African towers. Keywords: Editorial, MNOs, Southern Africa, South Africa, Telkom, MTN, Cell C, Vodacom, Eaton Towers, American Tower, Acquisition, Market Overview, Valuation, Investment, 3G, 4G, LTE, EBITDA, New License, Capex, Transfer Assets, Co-locations, Infrastructure Sharing, ARPU, Anchor Tenant, On-Grid, Operator-Led JV, Sale & Leaseback www.towerxchange.com | TowerXchange Issue 12 | 27| TowerXchange Issue 12 | www.towerxchange.comXX By Frances Rose, Head of Europe, TowerXchange
  • 28. as September 2014, but if MTN or Vodacom did decide the time was right to sell towers, they’d have no shortage of bidders. Vodacom South Africa’s EBITDA margin was 37.4% in Q4 2014. MTN, South Africa’s second operator, currently has 28mn subscribers, and although intensifying competition in South Africa resulted in MTN’s market share declining by 2.7% over H1 2014, with revenue down 7% and EBITDA down 1.5%, negative subscriber growth has been reversed and MTN remains in a robust position.  MTN South Africa’s EBITDA margin was 32.1% in Q4 2014. MTN stepped back from a sale to American Tower in 2013 and until recently have appeared to lack the motivation to divest their South African towers. However Telkom’s RFP may well prove to be a catalyst for MTN reassessing this choice, indeed Airtel’s African tower sale triggered MTN to bring their Nigerian towers to market. Unsourced rumours in the press suggest MTN has again received interest from American Tower in at least part of their network of 9,000 towers, believed to be valued at $1.5-$2bn, and has been holding talks with potential buyers, although a deal is unlikely to happen in 2015. It remains to be seen whether the Group will re-evaluate their timetable to get to market first if the Telkom South Africa process does culminate in the sale of their towers. With around 19.6mn subscribers Cell C is the fastest growing operator in the South African market, growing market share by over 100% since 2013. Their introduction of a flat call-rate of 99c / min, www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com28 to any network, and the lowest data rate, of 0.15c/ MB has meant rapid growth in terms of market share and has challenged the high-margin stance of the other players in the market. Cell C has already divested around 1,400 towers to American Tower. Telkom, Africa’s largest fixed-line operator, has just 2mn mobile subscribers in South Africa. The company launched its mobile business in October 2010 and was privatised in 2013. However, despite Telkom’s leading role in the fixed-line market, their mobile offering has laboured to capture market share from leaders Vodacom and MTN. As a result Telkom has launched a restructuring plan to cut R5bn in costs which remains on track which remains on track with their share price better than doubling in the last 12 months. Although rumour has it that Telkom will only divest 500 of their macro towers rather than the formerly announced 3,500, the full portfolio could be worth as much as $1 billion and could free up significant capital for the operator, who are also believed to have an interest in acquiring competitor Cell C. Telkom has an existing agreement with MTN, signed in March 2014, which outlines intentions to conclude RAN sharing agreements. On 31st December 2014 Telkom stated: “Shareholders are further advised that Telkom and MTN South Africa remain in discussions regarding the potential extension of their existing roaming agreement to include bilateral roaming and outsourcing of the operation of Telkom’s radio access network, which if successfully concluded may have a material effect on the price of Telkom’s securities,” Vodacom South Africa 38.8 MTN South Africa 34.5% Cell C 24.2% Telkom Mobile 2.5% Source: TowerXchange South Africa mobile market share, Q4 2014 34.5% 38.8% 24.2% 2.5%
  • 29. www.towerxchange.com | TowerXchange Issue 12 | 29| TowerXchange Issue 12 | www.towerxchange.comXX These plans to outsource management responsibilities for their radio access network to MTN, with a simultaneous process to divest passive infrastructure, mean Telkom may well be on the path towards backing their mobile offering into an MVNO and need to work out what the realistic return prospects might be on that basis. TowerXchange’s sources suggest that Telkom’s legacy urban sites are highly desirable on the basis that they were built several years ago, before site permitting rules were tightened up, meaning the portfolio could be extremely interesting to trade buyers. Tower assets Only 10% of South Africa’s towers are managed by independent towercos, with three of the top four operators retaining their own networks. There is already widespread bi-lateral tower sharing in the market, particularly between Vodacom and MTN, meaning any tower transaction would face a complicated path to convert so many swaps into commercial leases but on the plus side, it also means tenancy ratios would likely start nearer two than one, which significantly increases the valuation that could potentially be realised from a divested portfolio. Network roll-out According to ITWeb, MTN is investing R10bn in capex in 2015 (US$835mn), closely followed by Vodacom with R8.5bn (US$711mn) and Cell C with R5bn (US$417mn). Although three of the South African MNOs have commenced roll out of 4G (Vodacom has around 2,000 LTE base stations, Telkom has 1,300 and MTN 1,000), the main factor delaying LTE rollout is not technology or coverage but spectrum allocation. The South African government has suggested it wants to use the next round of spectrum licensing to introduce more competition in the wireless broadband space, but this translates in the short term into a five year wait (to date) for the Independent Communications Authority of South Africa (ICASA) to assign sought-after spectrum. The result of this is that although 4G is being heavily marketed, availability is limited in most of the country. The two most likely scenarios – releasing spectrum to the existing players or the introduction of a new MNO/MVNO would both be well served by an independent towerco landscape in South Africa which could offer fast and deep penetration of the market. Who will be interested in the South African towers? Although the strong transport and power infrastructure in South Africa make it a much easier market to operate in than any of its SSA neighbours and may well open up this process to towercos with less of a frontiersy appetite, it seems likely that the bidding will be dominated by Africa’s ‘Big Four’ towercos who all have the experience and relationships to deliver in the region. There’s no doubt American Tower have an interest Estimated macro tower count in South Africa MTN Telkom Vodacom *Cell C American Tower Eaton Other middle market and small towercos *In their Q4 2014 results Cell C announced that they had 4,524 sites on air. It is not clear which of those sites are owned towers, which were sold and leased back from American Tower, built to suit by American Tower or other suppliers, and which are co- locations on towerco or other operators’ towers. 9000 3500 7000 1918 170 200 500 Source: TowerXchange
  • 30. in this opportunity in South Africa. As the biggest independent player in the market to date, they have proven relationships in place and a base from which to grow. Indeed, there are already reports that they are speaking to MTN about acquiring their towers. The 1,400 towers purchased from Cell C are already generating return on capital invested of approximately 20% in local currency and American Tower managed to increase the tenancy ratio from just over one to nearly two ‘tenant equivalents’ per tower within three years of their acquisition – South Africa has proven a successful and profitable market for American Tower. Of the other ‘Big Four’ players in Africa, Eaton already manages 170 BTS towers in the country, and their imminent acquisition in Egypt and associated capital raise demonstrates that they are still in the market to grow their portfolio in Africa through large scale tower deals. IHS’s control of the independent tower market in nearby Zambia and scale as the largest independent tower owner on the continent will undoubtedly lead them to assess the opportunities in South Africa and it seems likely that Helios, with broad experience of working in African markets, will have an interest in this profitable region. Towers in South Africa are operated under a simpler ‘steel and grass’ business model – towercos don’t have to get their hands dirty engaging with the energy supply chain as they do elsewhere in SSA. As such, South Africa could attract additional bidders including both International towercos and private equity and institutional funds with an www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com30 appetite for this asset class. We would expect the number of bidders, should MTN’s South African towers come to market, to exceed ten. Historically MTN has favoured retaining substantial equity in joint venture towercos in their most investible markets, retaining 49% equity in joint venture towercos with American Tower in Ghana and Uganda, and an unprecedented 51% equity in their joint venture towerco with IHS in Nigeria. Conclusion The Telkom and MTN portfolios together represent ~12,500 macro towers, or around 70% of the South African tower market. If both sale processes are completed within the next year, it would mean a significant shift from a 17% towerco presence to independent toweros controlling almost 90% of the market (factoring in continuing organic growth). With planned LTE rollouts and only 9% of the market served by wireline infrastructure, South African telecoms will see a huge rise in mobile data over the next few years, creating a very attractive market for whichever towerco or towercos manage to secure the assets.   It remains to be seen whether MTN will expedite the sale process in order to be the first to market and whether the South African market will be dominated by one player or split between two or more towercos, as we saw in Nigeria, but there is no doubt that the process will ignite the competition in the African market once again Meetup Africa 2015 Meetup Asia 2015 Meetup Americas 2016 www.towerxchange.com Meetup Europe & Global Award Ceremony 2016 1-2 October, Johannesburg 24-25 November, Singapore 14-15 June, São Paulo Q1 2016, London
  • 31. Updated Asia tower counts and heatmap www.towerxchange.com | TowerXchange Issue 12 | 31| TowerXchange Issue 12 | www.towerxchange.comXX Bangladesh: Market restructuring continues in Bangladesh as edotco Bangladesh has signed an agreement with Qubee, a leading wireless broadband provider in this market, to share passive infrastructure and support their planned nationwide rollout. edotco had previously carved out 5,300 assets from Robi. Bharti Infratel may wish to enter the Bangladesh tower market, if the taxation environment were more favorable. Cambodia: the good news: Cambodia has 130%+ penetration and a sensibly restructured MNO market. The bad news: challenging grid conditions. edotco active in the market with 1,500 towers. CamGSM and Mobitel believed to have considered tower sales in the last few years. China: Established in 2014 and with a huge staff and 120,000 site BTS contract already secured, China Tower Company is reportedly set to take on ownership of approximately 950,000 telecom towers from the country’s three mobile network operators by 15 August 2015. It is estimated that China Mobile, China Unicom and China Telecom have 540,000, 279,000 and 180,000 towers respectively. India: The latest spectrum auctions have seen intense competition between the country’s mobile network operators over the bands required to continue upgrading 3G services and eventually offer 4G. Speculation continues over the potential sale or IPO of Viom Networks and the launch of a new towerco by BSNL but there have been no major recent developments. Indonesia: The Telkom-Mitratel-TBIG and XL Axiata STP transactions announced at the end of 2014 drove towerco ownership to 51% of Indonesia’s ~75,000 towers. TBIG and Protelindo’s tenancy ratios (1.7- 1.8), EBITDA and share price performance remain impressive, despite growing rumours of pressure on lease rates. Protelindo (11,216), IBS (2,079) and Re-tower (~450) also own significant portfolios, but our tip for growth in 2015 is KIN, who have set out to “roll up” some of Indonesia’s long tail of regional towercos. Malaysia: edotco has carved out 3,500 towers from Celcom in Malaysia. A further 3,200 towers are owned and operated by a diverse group of State-backed independent towercos. Malaysian commentators felt that the recent sale of one of the State-backed towercos, KJS, is an isolated incident, and that a substantial rollup of Malaysia’s smaller towercos is unlikely, given the alignment of political and personal interests it would require Source: TowerXchange Estimated Asian tower count comparisons China 950,000 India 450,000 Myanmar 6,850 Sri Lanka 7,000 Pakistan 35,000Malaysia 20,000 Vietnam 45,000 Indonesia 75,000 Bangladesh 26,000 Thailand 55,000
  • 32. www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com32 across the country. Myanmar: Phases one and two of the rollout are complete. Telenor (through Apollo and IGT) and Ooredoo (through PAME and MTC) have rolled out the majority of the initial 5,000 towers they contracted - naturally a few locations were eliminated due to permitting issues or duplications. With MPT’s contractors building new towers too, there were around 6,850 towers lit in Myanmar at the start of Q2 2015. Tenancy ratios remain close to one. An attempt to co-ordinate the third phase of rollout between Telenor and Ooredoo has faltered, and separate contacts have been awarded, Ooredoo dividing around 2,500 phase three towers between MIG, IGT and one other towerco - possibly PAME. Telenor has awarded 800 towers to Young Investment Group’s Eco-Friendly Towers. It is not clear yet whether a further tranche of phase three towers has been awarded by Telenor. All phase three towers will include provision of power equipment by the respective towercos. Digicel MTC’s assets - around 800 phase 1 and 2 towers build for Ooredoo - are rumoured to be for sale. Pakistan: Substantial tower portfolios could be coming to market in the near to medium term with speculation increasing about the potential sale of Vimpelcom and Telenor’s assets in Pakistan. Thailand: CAT is forming a towerco targeting 22,000 towers. TRUEGIF already has 7,000. Yet international operators complain there is no way “ “ With MPT’s contractors building new towers too, there were around 6,850 towers lit in Myanmar at the start of Q2 2015 Year Country 2012 Indonesia 2011 Indonesia Seller Hutchison Infratel Buyer Protelindo Tower Bersama US$/Tower N/A N/A Towers/Sites 503 595 Value US$ N/A N/A 2014 Indonesia 2012 Indonesia 2010 Indonesia 2010 India PT Telkom PT Central Investindo Hutchison Essar Group Tower Bersama Protelindo Protelindo American Tower $230k N/A $112k $97.1 4000 152 1482 4450 $904mn* N/A $165.9mn $432mn 2014 Indonesia 2014 Malaysia 2012 Indonesia 2008 Indonesia 2010 India 2008 Indonesia 2009 India 2008 India XL Axiata KJS** Indosat Bakrie Aircel Hutchison Viom Networks Xcel** STP YTL Power International Tower Bersama STP GTL Infrastructure Protelindo QTIL American Tower $131.4k $48.5 $207.6k $64.4k $103k $135.4k £134k $98 3500 309 2500 543 17500 3692 18000 1730 $460mn $15mn $519mn $136mn $1800mn $136mn $2407mn $170mn *Structured as a share swap agreement, PT Telkom receiving ~13.7% stake in Tower Bersama over two phases in return for 100% of Mitratel Tower Bersama also acquired Telenet Internusa, Bali Telekom, Prima Media Selaras and SKP between 2004 and 2010, plus 295 towers from Mobile-8 in 2006 ** Company acquisition Source: TowerXchange Tower deals in Asia 2008-2014 (excluding carve-outs)
  • 33. www.towerxchange.com | TowerXchange Issue 12 | 33| TowerXchange Issue 12 | www.towerxchange.comXX What proportion of the towers are owned by towercos? Estimated tower count for Malaysia 100 60% y/e 2014 85% y/e 2017 70% 51% 33% 33% 31% 20% 12% 80604020% Myanmar Myanmar India Indonesia Malaysia Cambodia Sri Lanka Bangladesh Vietnam Early stage markets: China, Pakistan, Thailand, Negligible towerco activity: Bhutan, Japan, Laos, PNG, Nepal, Philippines, Singapore Source: TowerXchange Sacofa 765 Touch Matrix 460 D’harmoni 346 KJS 309 Common Tower 260 Infra Quest 201 Yikedbina 200 Perak Integrated Networks 150 Asia Space 137 Desabina 118 Melaka ICT Holdings 9 5 Rangkaian Minang 90 PDC Telecommunications 4 3 Perlis Comm 23 edotco 3,500 13,300 Remaining MNO-captive 3,200 ge State-backed and other independent towercos for them to share towers in the country. Plans for a 4G spectrum auction in Thailand by September 2014 have been thrown into question due to potential regulatory hurdles and ongoing disputes between national and private network operators. Sri Lanka: Dialog has transferred 2,150 towers to edotco, and Bharti Infratel again believed to be interested in entering the market. High levels of bi-lateral sharing means tenancy ratios are closer to two than one. 4G driving need for cell site densification. Vietnam: Restructuring of the telecoms market in Vietnam continues, and interest in infrastructure sharing is increasing. Vinacap has acquired 3 companies and a portfolio of 1,930 towers in the Vietnamese market, and Golden Towers has approximately 600; towercos currently own 10 - 12% of towers in this market. Further baseline data and infographics on the India and Myanmar tower markets can be found in the India Special Feature and Myanmar Tower Dossier within this edition Source: TowerXchange
  • 34. www.towerxchange.com | TowerXchange Issue 12 | 34| TowerXchange Issue 12 | www.towerxchange.com34 Asia heatmap Note: Russia is covered under Europe; we estimate it to have a 5% towerco penetration and we expect it to be a growth market Source: TowerXchange TowerXchange research has not revealed any infracos or towercos to date Towercos or infracos active in the market. No recent transactions have taken place and none rumoured to take place soon Towercos or infracos active in the market. No current transactions taking place but an attempted tower sale has taken place in the last 3 years or there are unconfirmed rumours of a deal in this market. Towercos or infracos active in the market. Rumours of deals confirmed in the market. Towercos or infracos active in the market. Deals of significant size have taken place in the last 5 years. Towercos or infracos active in the market. Deals have taken place in the last year and more imminent deals rumoured Legend
  • 35. Thailand- CAT Telecom will reportedly complete the formation of Telecom Tower Company by Q3 2015 to optimise the management of its towers. CAT also aims to resolve ownership disputes on said towers with its concession holders Total Access Communication (DTAC) and TrueMove. Telecom Tower Co. should have 22,000 towers; 12,000 of these will be transferred from DTAC, 8,000 from TrueMove. The remaining 2,000 are already in CAT’s possession. Thailand - The upcoming Thai spectrum auction for technology-neutral (4G) mobile spectrum (900MHz and 1800MHz) licences expected to take place by September is now in doubt in spite reassurances from the Deputy Prime Minister, Pridiyathorn Devakula. Thai Prime Minister General Prayut Chan-o-cha has stated that it still remains to be seen if these auctions could take place under present law. At the same time Thailand’s ICT Ministry has gone on the record saying that all disputes over state and private network ownership should be resolved before these auctions take place. India - GTL is planning to sell off most of its assets to repay outstanding debts which amount to Rs.13,000 crore. GTL has received inquiries from investors in the UK and the US www.towerxchange.com | TowerXchange Issue 11 | 35| TowerXchange Issue 11 | www.towerxchange.com35 in the operations and maintenance part of its 28,000 towers, which is separate from its energy venture which is in the final stages of being sold to Intelligent Energy. The company is also looking into the possibility of diluting their promoter stake and entering into a joint venture. GTL’s problems began in 2013 when its acquisition of 17,000 of Aircel’s towers fell through after the regulatory restructuring in 2012. India - Indus Towers will spend INR2.2 billion (US$35.1 million) to convert 3,000 street lamps in New Delhi into telecom towers over the next three years according to the Economic Times. The aim is to install 2G/3G/4G antennae on 1,000 sites per year across New Delhi. The sites will be upgraded with energy efficient LEDlights, CCTV cameras and Wi-Fi access points and will also be connected to the main fibre-optic networks in the metro area. The is the first initiative of Indus Towers in support of the development of connected cities across India. Indonesia - Dian Siswarini has taken on the role of CEO of XL Axiata and is outlining her plans to boost the company’s brand and upgrade its data services. This move is in response to strong increase in demand for data; the company’s data traffic grew rapidly in 2013, increasing 126.7% to 123,824TB. Siswarini announced a combined brand strategy for XL and Axis, with XL focussing on the high bandwidth mobile data segment and Axis on more competitively priced products for lower-volume users. Axiata plans to invest IDR7 trillion (US$537 million) on upgrading its 3G and 4G services in 2015. Indonesia - Solusi Tunas Pratama (STP) is planning a sale of its shares in Q2 2015 and expects to raise up to US$400 million. STP also sold a US$300 million five-year bond on the international markets earlier this year. The company owns over 6,000 towers in Indonesia after aquiring 3,500 towers from PT XL Axiata in 2014. STP is partly owned by US private equity firm Carlyle Group. China - China Tower Company, the telecom infrastructure sharing company owned by China Mobile, China Telecom and China Unicom is reportedly set to take on ownership of nearly one million telecom towers according to analysts at Barclays. According to the report the three operators will receive gains totalling 148 billion yuan (US$23.88 billion). Barclays has estimated that China Mobile, China Unicom and China Telecom had 540,000, 279,000 and 180,000 towers respectively. Barclays also estimate that this joint venture would reduce capex by approximately 6% for a five-year saving of 76 billion yuan Asia News
  • 36. Crown Castle entertaining offers for their 1,772 towers in Australia Potential buyers are lining up to acquire this profitable tower portfolio, marking a major potential deal in the Australian market Crown Castle International Corp., the largest provider of shared wireless infrastructure in the US, is considering the sale of its share in Australian subsidiary CCAL. Crown Castle currently owns a 77.6% stake in CCAL which is the largest wireless tower operator in Australia. The CCAL portfolio includes 1,772 towers with an average tenancy believed to be around 2.4, generating roughly US$107bn EBITDA on an LQA basis. According to the Australian Financial Review, the towers are expected to sell for ~US$1.25bn, representing 17x-18x earnings. Crown Castle Australia has been responsible for the vast majority of tower deals in Australia since it was founded in 2000; it built its portfolio with towers acquired from Optus, Hutchison and Vodafone between 2000 and 2008. In a recent news release, Crown Castle’s President and Chief Executive Officer Ben Moreland stated “In light of recent unsolicited offers we have received for our interest in CCAL, we have determined that fully exploring the options available to us will ensure the best long-term results for our shareholders. Similar to our US business, CCAL has developed into a leading wireless infrastructure provider in the attractive Australian market with a unique portfolio of assets and platform for future growth and expansion.” The Australian telecoms infrastructure market is highly consolidated; 74% of the estimated 9,000 towers are owned by the top three network operators, Telstra, SingTel (Optus) and Vodafone Hutchison Australia. Telstra owns the lions-share of operator captive sites, but has finite appetite Read this article to learn: < Background information on Crown Castle International including tower footprint < An overview of the Australian operator and tower markets < Understanding the main motivating factors behind the sale < A look at some of the potential buyers Telstra subscribers Optus subscribers Vodafone subscribers MNOs Towercos, independents and government agencies 80 60 40 20 70 50 30 10 Source: TowerXchange Keywords: Australia, MNOs, Towercos, Investors, Asia Pacific, Deal Structure, Acquisition, Market Overview, 3G, 4G, EBITDA, Telstra, Optus, SingTel, Vodafone, Hutchison, Morgan Stanley, Credit Suisse, Brookfield, Macquarie, AMP Capital, Crown Castle www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com36 Breakdown of the Australian tower marketTelstra remains the market leader 16 million 9.4 million 5 million 76% 24%
  • 37. for sharing, and no apparent interest or incentive to divest the assets. According to Buddecom, Telstra remains the market leader with more than 16mn subscribers, while Optus has around 9.4mn and Vodafone now has fewer than five million, compared to about 7.6mn in 2010. The remaining 26% of the tower market is controlled by Crown Castle Australia, Broadcast Australia and other smaller players and government agencies. The continued rollout of LTE after the 700MHz spectrum auctions in 2013, and NBN (National Broadband Network) investment in fixed and wireless infrastructure, suggests that there may be some potential growth in the Australian telecoms infrastructure market. However, Telstra views its superior network coverage as a major competitive advantage and is unlikely to sell its infrastructure or engage in active network sharing anytime soon. It seems that an initial process initiated by a minority shareholder attracted unsolicited offers for 100% of the equity in CCAL. The Australian states that Morgan Stanley and Credit Suisse have been appointed to lead an auction process, with Brookfield, Macquarie Infrastructure and Real Assets (MIRA) and AMP Capital mentioned as prospective bidders. Crown Castle’s Australian business has been a highly profitable portfolio and is likely to continue being profitable for the foreseeable future. This could ultimately play out similar to Crown Castle’s successful entry into and exit from the UK market. Given CCI’s status as an REIT in the US as of January 2014 they can’t fully take advantage of registering as a REIT in Australia. The tax regime in Australia would seem to facilitate a mutually beneficial transaction, enabling  a local infrastructure, superannuation or pension fund to benefit from a more favorable tax status by putting the CCAL assets into a REIT, and the relatively slow growth and stable revenues seem better suited to this rather than another international towerco pursuing aggressive growth. Australia is receiving growing recognition as having the world’s largest REITs market outside the United States. More than 12 percent of global listed property trusts can be found on the ASX. The prospective divestiture of Crown Castle’s assets in Australia would seem to align with the company’s increasing focus on the performance and expansion of their portfolio of 40,000 macro and 14,000 small cell nodes in their US domestic market www.towerxchange.com | TowerXchange Issue 12 | 37| TowerXchange Issue 12 | www.towerxchange.comXX “ “In light of recent unsolicited offers we have received for our interest in CCAL, we have determined that fully exploring the options available to us will ensure the best long-term results for our shareholders Visit the TowerXchange.com website < Access to the “Internet of People” in emerging market towers – a trust web of over +10,000 decision makers in passive infrastructure < Independent analysis and commentaries on the prospects for tower transactions in selected countries < The latest industry emerging market tower industry news – BEFORE it’s published in the TowerXchange Journal, accessible 24/7 from desktop, tablet or mobile < A comprehensive archive of TowerXchange’s interviews and analyses, searchable by topic, country, company or grouped by category (e.g. interviews or how to guides) < The latest news and registration information about TowerXchange’s Meetups.
  • 38. Asset transfer and deal size accelerating in the European market Unlike the African or Latin American markets, the European independent tower market has achieved significant scale without the need for a ‘land grab’ of tower transactions in the last few years, mainly due to the availability of legacy infrastructure and towerco growth through broadcast and utility www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com38 assets. However with over 20 towercos active in the region and an increasing interest from infrastructure funds and strategic investors, there is potential for further deal flow in European towers. Over the last seven years ten deals of scale have taken place in the European market, transferring around 18,000 towers from operator-captive to independent ownership. Of this, 11,654 towers (65%) have been bought in the last two years by the highly acquisitive Abertis, at a cost of €1.17 billion. TowerXchange believes that 2015 will see more deal activity in Southern Europe, in particular the Orange assets in Spain and Telecom Italia’s towers in Italy, although it is as yet unclear whether their proposed IPO will take place or whether Abertis’ rumoured interest in the assets will result in another tower sale. TowerXchange is also tracking the repeated attempts by incumbent Italian towerco EI Towers to acquire a significant stake in Rai Way, who own 2,300 broadcast and transmission sites in the country. TowerXchange has identified over 20 independent towercos who own and manage towers in Europe. Of these, ten are believed to be members of the new European Wireless Industry Association: Abertis (Spain and Italy), Arqiva (UK), Axion (Spain), EI Towers (Italy), FPS Towers (France), Open Tower Company (Netherlands), TowerCom (Ireland), American Tower Germany, Protelindo (Netherlands) and Wireless Infrastructure Group (UK and Netherlands). In addition, a further seven towercos manage in excess of 250 towers across their portfolios; Shere Group (UK and Netherlands), TDF (France and Germany), Russian Tower (Russia), UKRTower (Ukraine), Emitel (Poland), Global Tower (Turkey) and ESB (Ireland). In total these towercos manage over 65,000 towers across Europe, Russia and Turkey Top ten independent towercos in Europe by telecom tower count (excludes infracos) 5000 A bertis TD F A rqiva G lobal Tow er EITow ers FPS A m erican Tow er G erm any W ireless Infrastructure G roup Russian Tow ers Shere G roup 10000 15000 20000 15377 11000 10550 7870 2700 2166 2031 2000 1500 860 Source: TowerXchange
  • 39. www.towerxchange.com | TowerXchange Issue 12 | 39| TowerXchange Issue 12 | www.towerxchange.comXX European tower deals since 2008 European tower activity - the headlines Year 2012 2012 2012 2010 2008 2014 2012 2015 2015 2012 Country Towerco Operator #Towers Deal value Cost per towerDeal terms France Germany Netherlands Netherlands Netherlands Spain Spain Italy Italy Netherlands FTP American Tower Protelindo Open Tower Company Open Tower Company Abertis Abertis Abertis Abertis Shere Group Bougyes Telecom KPN KPN KPN KPN Telefonica/Yoigo Telefonica TowerCo Wind KPN €185 million €100,400 €393 million €193,500 €75 million €287,000 Unavailable NA Unavailable NA 2166 2031 261 500 101 €385 million €90,000 €45 million €90,000 4277 500 €94.6 million €309,000 per site €693 million €104,400 €115 million €250,000 212 (plus 94 points in tunnels) 7377 460 SLB with 15% equity SLB SLB SLB SLB SLB SLB Trade sale SLB with 10% equity SLB Source: TowerXchange Czech Republic Infraco formed by PPF and T-Mobile Denmark Falck (towerco) and Hi3G (infraco) have small portfolios Finland Digita sold to First State Investments in 2012 France Towerco FPS active after acquiring towers from Bougyes Telecom. TDF lead the market, ITAS TIM and Towercast also active Germany Towercos Deutsche Funkturm and American Tower active in the market, ATC's towers bought from KPN Hungary Antenna Hungaria acquired by the state from TDF in 2014 Ireland Several middle market towercos, rumoured that Telefonica would divest towers but no movement as yet Italy Towerco Abertis have made 2 recent acquisitions. Current activity with Telecom Italia towers and EI/ RaiWay Latvia Bite Group brought towers to market in 2013 but no agreement reached Netherlands Protelindo, Shere Group and Open Tower acquired a total of 1,322 towers from KPN Poland Emitel (towerco) and NetWorkS! (infraco) active in the market Portugal Portugal Telecom towers rumoured to be brought to market in 2014 although no sale agreed Russia Towercos Russian Tower and Link Development active in the market, rumour that Vimpelcom towers may be first to come to market Spain Towerco Abertis active after acquiring towers from Telefonica/Yoigo. Axion also active Sweden Several infracos including Net4Mobility, 3GiS and SUNAB Turkey Turkcell’s Global Tower manages over 16,000 sites including 7,000 macro towers UK Towercos active in the market include Arqiva, WIG and Shere Group, MBNL and Cornerstone sizable infracos Ukraine Towerco UKRTower active in the market
  • 40. www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com40 European heatmap TowerXchange research has not revealed any infracos or towercos to date Towercos or infracos active in the market. No recent transactions have taken place and none rumoured to take place soon Towercos or infracos active in the market. No current transactions taking place but an attempted tower sale has taken place in the last 3 years or there are unconfirmed rumours of a deal in this market. Towercos or infracos active in the market. Rumours of deals confirmed in the market. Towercos or infracos active in the market. Deals of significant size have taken place in the last 5 years. Towercos or infracos active in the market. Deals have taken place in the last year and more imminent deals rumoured Legend Note: For the purposes of our European coverage, ‘Towerco’ describes an independent company which owns and operates passive infrastructure for commercial profit. ‘Infraco’ incorporates MNO joint venture organisations and carve outs which serve more than one entity or market their towers commercially Source: TowerXchange
  • 41. Poland – Aero2, owned by Poland’s Midas Group, has announced the launch of LTE services. The operator will use over 1,000 LTE- 800 base stations in addition to its existing 4,170 transmitters. Midas claims its combined LTE networks now reach more than 90% of Poland’s population UK – Hutchison Whampoa Limited, parent company of UK based operator Three, has confirmed its intention to buy British operator O2. HWL confirmed that it will acquire O2 UK for £9.25 billion, creating the UK’s largest mobile network operator with over 33 million subscribers. The tower assets of O2 and 3 are currently managed by different infracos (Cornerstone and MBNL) so TowerXchange awaits new of their network plans with interest. Ukraine - Kyivstar, Ukraine’s largest MNO, has released information on its future-proof Single RAN network design for new infrastructure, enabling it to upgrade to LTE simply by updating software and meaning they do not need to upgrade hardware on their base stations, which already support 2G GSM, 3G UMTS and 4G LTE. Romania - The largest MNO in Romania, Orange, has announced it will spend €500 million by 2018 as part of parent company Orange Group’s €15 billion investment in their European www.towerxchange.com | TowerXchange Issue 12 | 41| TowerXchange Issue 12 | www.towerxchange.comXX networks in 2015-17. CEO Jean Francois Fallacher also stated that the MNO is asking for changes in Romanian regulations to oblige companies with fixed infrastructure to open access to rivals in the same way mobile networks are required to do. France - France has called upon its MNOs to address ‘not-spots’ in rural areas within the next 18 months. Les Echos reported that France’s Prime Minister Manuel Valls called for provision of 3G services in ‘white areas’ in this timeframe. The French government has allocated a total of €1 billion to address public services issues in underserved locations. Croatia – Tele2 Croatia and Huawei have signed a contract to roll out 3G to all Tele2’s mobile sites and for additional passive infrastructure to be constructed in order to improve coverage. It is expected that Huawei will use its Single-RAN wireless network solution to allow for future network upgrades without additional hardware. Italy – EI Towers’ interest in RaiWay continues, with a revised bid for a 49% stake in the company, which would allow the Italian government to retain a critical 51% stake in RaiWay themselves. EI Towers has submitted more information on the proposed €1.23 billion takeover to market regulator Consob. Europe News Italy – Telecom Italia may consider selling their towers unit Inwit to Abertis Telecom (Cellnex) rather than following through on plans to list the company before the summer. Inwit has around 11,500 towers in their portfolio. Abertis have confirmed to TowerXchange that they are monitoring the Italian market closely, however their own plans for an IPO may complicate a potential deal. Netherlands – Liberty Global, the Dutch operator, is expected to acquire either Vodafone Netherlands or T-Mobile Netherlands in a deal worth €3-4 billion. It is rumoured that all parties have acknowledged the need for consolidation and Liberty Global is expected to be the acquiring party. Some sources claim the deal may spark wider M&A activity in Europe, with asset swaps in other markets a strong possibility. Spain – Abertis have formally announced the IPO of their telecoms unit, offering 55% of wholly-owned subsidiary Cellnex Telecom with an over-allotment of an additional 5.5%. Tobias Martinez, CEO of Cellnex Telecom said “Our diversified and highly visible revenue streams, healthy pipeline of growth opportunities and experienced management team place us in an optimal position to continue our rapid growth trajectory. Looking ahead, we are seeing significant potential for growth in telecom site outsourcing in Europe with very favourable underlying market dynamics.”
  • 42. Abertis agree to buy Wind towers for $774 million Deal gives Abertis a foothold in the Italian market The bidders Abertis’ telecoms business focusses on telecoms, media and public administration, with tower sites to date in Spain and Italy. Currently the most acquisitive of the European towercos, their focus on creating a pipeline of tower acquisition opportunities across the continent in the face of limited competition is moving them quickly into the position of Europe’s largest multi-country towerco. Abertis has also recently confirmed plans to spin out the Abertis Telecom part of the business via IPO to allow them to take advantage of “a market where there are currently many opportunities, particularly in the European mobile telephone towers segment”. Abertis reportedly beat Italian investment fund F2i’s joint offer with Providence Equity Partners, who also backed Helios Towers Africa in their most recent round of capital raising, coinciding with the acquisition of part of Bharti Airtel’s tower portfolio in Q4 2014. Combining Providence Equity Partners’ experience and appetite for the tower market with F2i’s expertise in Italian infrastructure, particularly in the areas of utilities and transportation, they appeared to be strong contenders. However there is no information in the public domain about how the assets would have been managed if their bid has been successful, raising the possibility that they would have either recruited a management team or made a trade acquisition to obtain the necessary skills and processes wholesale. Other early contenders for the deal were believed Read this article to learn: < Which towercos and organisations were interested in the Europe’s largest tower divestment in recent years < Why Abertis were successful in securing the deal < What market factors precipitated the sale of Wind’s Italian towers < How the deal compares to other large European tower sales A deal between Abertis and Wind, the Italian mobile network operator controlled by Russian telecoms giant Vimpelcom, closed at the end of March. The deal, for a 90% stake in Wind’s tower subsidiary Galata, which owns 7377 towers, is worth €693 million or US$774 million. Keywords: News, Editorial, Europe, Italy, Wind, Abertis, American Tower, Telecom Italia, Deal Structure, Acquisition, Market Overview, Valuation, Investment, LTE, Lease Rates, Transfer Assets, Co-locations, Infrastructure Sharing, First Mover Advantage, Debt Finance, Cashflow Finance, Infrastructure Funds www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com42
  • 43. to include Italian native, Mediaset-controlled EI Towers, and American Tower. It is rumoured that American Tower withdrew from the process after successfully agreeing deals to acquire over 22,600 towers in deals with TIM in Brazil, Airtel in Nigeria and most recently with Verizon in their home US market. American Tower are however believed to retain ambitions to expand their footprint in Europe beyond their existing portfolio of just over 2,000 towers in Germany. Drivers for the deal As with all significant tower deals, the sale of a tower portfolio allows operators to release cash and stabilise opex. In the case of Wind, this will mean an opportunity to reduce debt, which at group level at Vimpelcom currently stands at €27.7 billion gross, and meet the capital requirements for LTE roll-out in Italy. The Italian market Italian mobile market penetration currently stands at around 158%, one of the highest rates of penetration in Europe. Wind is Italy’s third largest operator with 24% of market share behind TIM (35%), Vodafone (31%) and ahead of 3 (10%). The LTE rollout in Italy is currently well underway with TIM rolling out 4G+ in 60 cities and Vodafone in 80 cities nationwide. The network requirement of LTE rollout is currently estimated at around 7,000 towers and there is considerable overlap of existing coverage by several Italian operators. Although TIM and Vodafone did agree to passive infrastructure www.towerxchange.com | TowerXchange Issue 12 | 43| TowerXchange Issue 12 | www.towerxchange.comXX sharing in rural areas (populations <35,000) and for new 4G tower builds, their agreement doesn’t extend to the country’s most populated areas and tower sharing in Italy stood at under 20% before the Abertis deal. In a mature market where network coverage no longer offers significant competitive advantage and efficiencies can be found in co-location for LTE rollout, operators can gain significantly from a substantial towerco presence in order to consolidate their networks and reduce opex. Current towerco activity in Italy Until recently, the Italian market was dominated by EI Towers, controlled by Italian media giant Mediaset. EI Towers owns around 2,700 sites across Italy and, like other European towercos such as Arqiva and TDF, now offers telecoms solutions after originating in the broadcast industry. Although the Wind deal is the first substantial tower divestment in Italy to date, there has been rumors of aborted processes dating back as far as 2007, when Wind and 3 Italia attempted to divest a joint portfolio of 18,000 towers but failed to find buyers who would meet their valuation. As recently as 2014 TIM proposed the sale of its 12,000 Italian towers and did indeed sell 6,480 of its Brazilian towers to American Tower for $1.2 billion in a bid to reduce the company’s debt and regain an investment-grade rating after being downgraded to ‘junk’ status in November 2013. Current reports suggest that TIM is now considering an IPO for their Italian tower portfolio in 2015. Abertis already owns tower assets in Italy, having Albertis El Towers Inwit, Telecom Italia’s Towerco Operator-Captive Small local tower owners with <30 towers 7683 300 2700 12,000 14,000 Figure 1: Estimated breakdown of tower ownership in Italy
  • 44. bought TowerCo from Alantia in 2014 for €94.6 million. TowerCo works with all of the country’s major MNOs including Telecom Italia, Vodafone, Wind and 3 Italia. Abertis is believed to have acquired all 306 sites managed by TowerCo, which offer coverage for over 3,000km of toll road in Italy including 212 towers and 94 points in tunnels. Adding the 7,377 Wind towers to their portfolio will increase Abertis’ footprint and make them the largest towerco in Italy by a considerable margin. Taking into account reports of Telecom Italia’s tower portfolio standing at around 12,000, EI Towers’ at 2700, and estimating that the remaining operator-captive towers will number around 14,000, Abertis’ new combined tower portfolio of 7683 will represent around 20% of the total number of towers in Italy.  Comparison with the broader European tower market to date Over the last three  years the European tower market has seen several deals of substantial scale involving the transfer of assets from mobile network operators to independent towercos, most notably the Bougyes Telecom deal with FPS in 2012, KPN’s German operator E-Plus and American Tower in 2012 and most recently the transfer of Telefonica’s Spanish tower portfolio to Abertis in 2014. When viewed as a set, it’s clear that Europe’s largest (1,000+ towers and excluding carve-outs) transactions are increasing in scale, indicating that not only is the market more able to attract and deploy the capital to transfer larger portfolios, but also that operators are willing to commit more established assets and no longer view their networks as a critical competitive advantage. When assessed alongside the cost of each transaction, however, the resulting cost per tower is much more variable, indicating that there is no ‘one size fits all’ approach for the European tower market and that variables such as leaseback rates, tenancy ratios, tower condition and location play an important a role www.towerxchange.com | TowerXchange Issue 12 | XX| TowerXchange Issue 12 | www.towerxchange.com44 Europe’s biggest tower deals Cost of transaction Number of towers in transaction Cost per tower