Helios Towers is the most diversified tower company in Africa. Listed on the London Stock Exchange last year, it has raised over $Ibn to fund its expansion programmes. Omar Ben Yedder discusses the position with Kash Pandya, the company’s CEO.
This past year has further underlined the importance of technology and digital connectivity in our lives and work. The figures coming from the Global System for Mobile Communications (GSMC) are encouraging. For Africa, the projection is half a billion mobile subscribers by the end of this year and one billion mobile connections by 2024, with smartphone connections reaching 50% of total connections in 2020.
Operators in the region are expected to invest $52bn in infrastructure rollouts between 2019 and 2025.
Yet it is premature to celebrate. Data in Africa is still some of the most expensive, as a percentage of income, anywhere in the world. And despite massive progress, most African countries are still operating 2G and 3G technology.
Helios Towers is the biggest independent telecom tower operator on the continent. The towers are used by Mobile Network Operators (MNOs) to enable network coverage. Helios Towers is currently in six markets: South Africa, Tanzania, DRC, Congo, Ghana and Senegal, and recently announced entries into five new markets in Africa and the Middle East.
It currently operates 7,300 towers in those markets and following the announcement of its recent acquisitions, expects to reach well over 12,000 towers by the end of the year.
Subscriber penetration is still low
Despite what you read, Kash Pandya says, subscriber penetration of mobile services is still low. “If you exclude South Africa [with penetration of 68%], then in our two biggest markets, Tanzania and DRC, subscriber penetration is around 42% and 38% respectively – these are countries with populations of 60m and a little under 100m. In DRC, only 50% of the country has mobile coverage.”
In terms of technological advancement, he says, “3G has only recently overtaken 2G subscribers, and 4G is still relatively young in its roll-out outside of South Africa, across sub-Saharan Africa.”
Across Africa, transmission towers are still largely owned by the MNOs. “Of the 230,000 towers in Africa today, some 160,000 are owned by MNOs – that is, 70% are owned by the MNOs. Around the world, the ratio is inverted, with independent operators owning 70% of the mobile infrastructure,” Pandya points out.
However, when you factor in the cost of running these towers, Pandya sees MNOs rapidly selling off these assets and working with tower operators to expand across geographies.
From the global perspective, the founder of Space X and Tesla cars, Elon Musk, is using low orbit satellites to provide internet connectivity; the UK government has invested in a joint venture, OneWeb, that will compete with Musk’s Starlink. Google and Facebook are also trialling new systems. Is Pandya worried about the newer technologies?
“We welcome new entrants and in fact, the continent will need as much bandwidth as possible as the volume of data consumed increases,” he says.
“As you go up the technology spectrum, moving from 3G to 4G to 5G, then to 6G and 7G, the volume of data means that you will need a lot of infrastructure. On 2G, the antennas need to be 1km away, 3G brings that down to 1/2km and 4G reduces the space further.”
Securing power supply is a priority
The biggest challenge in Africa, he says, remains that of the availability of reliable power. “In Africa, a tower company is also a power company. In our existing 7,300 towers, we have a mini-power station that has a back-up system when the grid fails.”
The company operates with the MNOs on the promise of 99.9% power delivery – a service their clients value highly. “In many cases, the power grid can be off for as long as 50% of the time. Each tower has its own independent power supply, usually a diesel generator,” he explains.
The company also uses other power sources such as solar and battery solutions. However, he says, sorting out the grid problem is the most economic and environment friendly solution: “It will help reduce costs and this will inevitably filter through into lower call and data prices.”
“Securing power is a top priority if the continent is to develop at the speed it wants to,” he adds. “Doing so will involve a diverse energy mix.”
Commenting on the role of regulators across the continent, Pandya is on the whole complimentary. His experience has been positive but he would like some of them to move a little faster on their liberalisation programmes.
Sizeable war chest
We discuss Ethiopia, where the recent licensing round, the most anticipated telco story of the year, failed to live up to expectations. Mixed messages about whether or not the new telcos would be allowed to offer mobile money services also dampened enthusiasm. Voice is no longer a money-spinner for the MNOs and it is data and other services that they are more interested in.
“The response was a little muted, and the ongoing political challenges didn’t help. But it’s still a fascinating market of 110m people and the country only has 8,000 towers. To put that in perspective, South Africa, with a population of 60m, has 30,000 towers. It’s a market that we’re following closely,” he responds.
Having listed on the London Stock Exchange in October 2019, Helios Towers now has a sizeable war chest to finance expansion plans. It has raised around $1bn in the last 18 months.
“Through our acquisitions, which have strengthened our footprint in Africa and establish us as a leading tower operator in Oman, we expect to achieve our Group target of 12,000+ towers well ahead of plan,” he says.
Pandya adds that the company is also looking at diversifying and going into fibre optic, as well as servicing data centres with off-grid solutions. “But our focus will remain on towers, given that there is still so much scope for growth,” Pandya concludes.
Across the continent, all their operations are run by Africans and 98% of their staff in operations are from the country they work in. Localising their teams was an important part of their business strategy when Pandya joined Helios Towers in 2015. This does have significant advantages when dealing with problems on the ground.
Aside from power, what other issues do they have to contend with; is insecurity in DRC an issue, for example? There are challenges, he explains, when there is conflict between different factions, as has happened in Goma and Kivu. In those instances, their concern is to protect staff, and this means that they stop working. To date no staff have been harmed because of conflict. Interestingly, even during conflict, they haven’t lost a single asset because telecommunications are fundamental and everybody relies on the mobile telecommunication network.
In fact, he recalls, a tower stopped working once when the generator ran out of diesel. The fighting factions escorted his team into and out of the location to get the generator working again.
Is he confident about the future? He still thinks that we’re another five years away from 5G across our markets in Africa, but he is happy to see that the price of handsets has come down significantly, with smartphones being sold for as little as $20. As these become more prevalent and 4G technology is adopted widely, this will really transform the continent’s prospects, he adds.