Why Telecom Towers business is going to be the most profitable business in Africa
Telecom Towers Business
Holding a great opportunity for new entrants into the market, separating tower businesses into standalone companies has recently become trendy to telecom operators as it enables mobile companies to focus on higher-margin business.
Motive?
- The high value of mobile towers
- Yearly high increase of mobile data usage
- Promising rollout of 5G
- Investors’ will to pay top dollar to maintain rising income
What is the importance of the digital economy for African countries?
- Africa should consider digital development, especially with the unique opportunity it has to become more sustainable and create economic growth through substituting the old technologies that consume fossil fuels by better usage of data.
- New digital technologies offer Arica opportunities for rapid economic growth via innovation, access to services, job creation, and digitalization.
This accelerates the spread of information, connects people, creates even more jobs and enhances the efficiency level of various societies, opening, in addition, chances for further global economic cooperation.
- African digital economy is rapidly transforming societies.
The improvement of millions of lives will overcome the current challenges faced by a huge population of African youth with such incremental pace of economic and social advancement, denying them their opportunity to develop and achieve proper growth and making them suffer digital divide.
African Market Overview
Over the past decade, many factors have contributed to support drastic evolution of the telecom towers industry in Africa:
-
The increasing and dynamic demands
of new markets in Africa were successfully matched thanks to the towercos managing to adapt both their proposition and business models.
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The adoption of internet connection in Africa
is empowered by the penetration of digital technologies and investments form various organizations and governments.
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The outbreak of COVID 19
was marked by a significant increase in demand for internet services having the majority of the population staying home, working remotely, getting an online education, communicating and entertaining themselves.
All that led to increased network traffic and data usage, which reflected in a notable outgrowth phase of the telecom industry.
-
Internet connectivity to rural areas
is counted as one of the major stimulators of the deployment and improvisation of the telecom infrastructure of these areas, enhancing the market growth.
The rise of the Towerco era: How 5G Towers are sending strong messages to investors
Various circumstances have led to the current shift in telecommunications infrastructure management creating drivers for the emergence of towercos, among which we basically highlight:
- Consumer significantly increasing demands for mobile data (more people connected to more devices requiring greater speed and bandwidth)
- Changes in the financial needs of the large telecom providers
- Ongoing technological advancements
What are TowerCos?
TowerCos are infrastructure-focused-companies that build, own, and manage a portfolio of cellular towers and properties for colocation, empowering individuals, businesses, and governments to connect to what matters.
The cellular towers are the backbone of these connections and the disruptive 5G technology will make them all even more indispensable.
TowerCos: The destination
Consequently, towercos became the destination of a growing share of the business.
Primarily, revenues are generated through leasing space on their communication sites to wireless carriers as well as other tenants.
Lease contracts may vary, according to factors like tower location and capacity, and also weight, space and position on the equipment.
Hence, the future is towercos, not telecoms, being the ideal way to leverage global data growth and 5G build-outs.
Global towercos are expected to grow both site-leasing revenue and earnings at a compound annual rate of 9% over the next three years.
And another edge
Having the ability to host multiple carriers, towercos have another operational edge over telecom-owned towers by increasing the number of tenants in every site leading to boosts margins and returns and raising the expectations of the incremental gross margins from an additional tenant to more than 90%.
How is the African Telecom Tower market segmented?
African Telecom Tower market is segmented upon:
- Ownership (operator owned, joint venture, private owned, MNO captive)
- Geographic location (country-based)
- Type of tower (generation – distribution)
- Generation Source (renewable, hydro)
- Fuel (renewable – non-renewable)
- Mounting area of the tower (ground, roof…etc)
Telecom Towers market dynamics
Currently, the telecom towers market primarily depends on drivers such as:
- mobile subscriber density
- number of telecom internet and service providers in the region and the increasing competition for better network coverage
- Wi-Fi and broadband providers
- the increasing reach to remote areas by mobile phones
Challenges: Factors that may suppress the telecom tower market growth
- Restrains from regulations from government and telecom authorities
- Expected opposition from the public due to the dangers of microwaves or high frequency radio waves on both the human and the environment
- High installation costs
- High operational costs
- Infrastructure and its impact on the digital divide which mainly reflects in:
- space
- permissible height limits in small zones that restrict service providers to install multiple towers
Major players
The Africa Telecom and Allied market consist of an outstanding number of regional and global players.
These players account for a substantial market share and focus on research and development, strategic alliances, and other growth strategies in order not only to sustain in this market, but to globally expand their client base, too.
Among the major African companies operating in telecom towers are:
- Helios Towers
- MTN Group
- American Tower
- ILS Towers
- Telcom SA SOC
Conclusion
In reflection to this, it is obvious how telecom towers in Africa offer unique opportunities for sustainability and rapid economic growth with the chances of regional and global cooperation meeting global standards working with modern digital technology which enhances lives of individuals societies.
Therefore, Africa needs to work on overcoming any challenges that may stand in face of its digital economy, and to be updated with digital trends, building more telecom towers to lessen the risk of digital divide and increase the benefits of being innovatively connected.
