Third-party tower companies (towercos) may be the key to accelerating connectivity and network coverage market growth across sub-Saharan Africa, Frost & Sullivan said on Wednesday.
To focus on their core operations, mobile network operators (MNOs) are increasingly becoming more comfortable with either selling off their infrastructure or outsourcing its management to a third party, which in turn leases capacity back to the operator and other providers of wireless communications services.
“Some MNOs are, however, concerned about losing strategic control and revenues when ownership of infrastructure is transferred to the towercos,” said Frost & Sullivan industry analyst Lehlohonolo Mokenela.
To accelerate market growth, towercos will need to convince MNOs of the reduced total cost of ownership of either outsourcing or selling off their infrastructure.
However, strong partnerships in sale and leaseback deals between towercos and MNOs, along with the development of a strong reputation and record in infrastructure management can go a long way in mitigating this hesitance.
“Despite the growing demand for wireless connectivity, particularly in remote areas, the business case for infrastructure investment is not always compelling. The success of towercos in the industry is a function of their tenancy ratios, which in sub-Saharan Africa, has been relatively low by global standards.”
These comments followed the release of prior analysis, which priced the market for tower services in the region at $991.7-million in 2016 and forecast a compounded annual growth rate of 8.8% to $1.5-billion by 2021.
Mokenela also noted the growing number of tower innovations expected to shape the evolution of the industry in the long term, including the structure of infrastructure outsourcing deals, supporting energy systems, base station technologies and infrastructure maintenance solutions.
“Given the region’s underdeveloped energy infrastructure, towercos have an opportunity to drive cost-savings through energy management. There is growing interest in hybrid systems to power mobile sites, which integrate power from the national grid and renewable energy solutions, such as solar together with storage batteries,” the company said in a statement.
Frost & Sullivan suggested towercos review potential partnerships with, or acquisitions of, specialist energy technology providers to accelerate their capabilities in this space.