Enhancing telecommunications through tower sharing

At a time when mobile network operators are seeking to reduce costs, speed up roll-out, and respond to growing regulatory and environmental pressures, Eaton Towers is offering a winning solution: Tower sharing.

Tower sharing is an efficient way for mobile operators to reduce operating costs by co-locating antennas on the same tower. All of the tenants on the tower benefit from shared cost of power, maintenance and security. By reducing these costs, operators can compete more efficiently and reach more subscribers, especially in remote areas. Tower sharing also benefits the environment by reducing unnecessary duplication of masts and their associated infrastructure.

According to a study by the Technology, Media and Telecommunications (TMT) Advisory and Investment firm Delta Partners, there are 200,000 towers in the Middle East and Africa. Towers in these areas are expected to increase by 50 per cent in the next five years.

Eaton Towers is an African-focused company that owns, builds, manages and maintains telecom towers. Working closely with governments, regulators and operators, the company encourages the sharing of telecom towers in order to maximize the potential of existing infrastructure and encourage wider coverage of telecom services to rural areas.

With its head office in London, Eaton Towers has permanent operations in Ghana, South Africa, Zambia, Kenya and Tanzania. It was established by a team of executives from Orange, Vodafone, Celtel and Venture Communications with significant experience of building and operating telecommunications networks internationally and with strong operational experience in Africa. The originally named Eaton Telecom; founded by Sanjiv Ahuja, Alan Harper and Terry Rhodes; merged with Venture Communications in 2009 and became Eaton Towers.

A clear strategy

The company offers shared site and tower services, which means that they either own or operate a tower with one or more tenants.  CEO Alan Harper says: "Tower sharing is key to cut down the operator's costs of running each site. Operators can use their existing towers to raise cash, reduce opex, or a combination thereof."

There has been a lot of growth through 2010 including more operations by independent towers companies. Keith Boyd, Sales and Marketing Director at Eaton Towers, says: "The numbers have grown dramatically and we expect that to continue in 2011 and 2012."
"Many operators were affected by the credit crunch in that they faced problems with raising or renewing debt funding. This has brought into focus the high costs of building passive infrastructure solely for their own use. As an independent towers company, Eaton Towers now carries the risk and cost of funding these roll-outs and leasing space on these sites to multiple operators."

By the end of this year there will be more than 10,000 towers in the hands of independent tower companies like Eaton Towers. Africa is showing a great deal of growth as an emerging market for sharing infrastructure.  "There is an appetite for investment in this space in Africa, and we are looking for projects of significant scale", says David Pfaff, Chief Financial Officer at Eaton Towers.

There is still a tremendous amount of growth that can happen within mobile communications in Africa. Pfaff says: "Post the credit crunch, many operators have been far more conservative with their capital expenditure and this did have the effect of slowing down roll-outs during 2009 and the early part of 2010. This is certainly gathering speed, not least through initiatives such as our Build-to-Suit program where we fund the roll-out of infrastructure for operators and charge them a subsidized leaseback rate."

Setting the standard

There was some resistance from operators to sharing infrastructure with competitors, but that mindset changed in the last 18 months. The obvious capex and opex benefits offered by tower sharing such as that offered by Eaton Towers are key contributing factors.

"If you are the only operator with a tower providing services in a village, the customers will be yours. Coverage overlap however is common and more and more operators realize that the benefit of consolidating infrastructure is vast and immediate.  The average subscriber in India uses more than 250 minutes per month on his mobile phone. In Africa, that number is around 80. But that will change as we work with operators to drive down the costs of rolling out and operating sites; thereby effectively reducing the operator's cost of delivery." says Boyd.

Boyd concludes: "We have an experienced management team who understands the importance of investing in a country over the long term, whether investment of cash, human resources or in the communities we operate in. Our modus operandi is to ensure that we have a strong management team in each country who understands the specifics of that country's telecommunications environment. Coupled with this experience comes a keen awareness of environmental impact, health and safety, and corporate governance which many of the multi-national telecoms operators encouraged and developed over the last 15 years in Africa, and we will continue to build on that." 

www.eatontowers.com

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