Infrastructure sharing and outsourcing will lead to new growth opportunities for mobile network operators (MNOs) in Nigeria like their counterparts across Sub-Saharan Africa.
This is is the opinion of leading consultancy, Frost & Sullivan, which says that tower companies (towercos) will increase market growth of mobile towers across key markets in Sub-Sahara Africa (SSA), including Nigeria.
To boost connectivity and increase network coverage, service providers will need to accelerate their investment in mobile towers, particularly in rural areas, Frost & Sullivan says.
This is because SSA remains one of the least connected regions in the world, with a mobile penetration of 82% compared to the 100% global average, according to Frost & Sullivan.
The consultancy anticipates that growth will be driven by third-party towercos, which will then lease capacity to MNOs as well as other providers of wireless communications services.
MNOs are gradually becoming more open to selling off their infrastructure, or outsourcing its management to third-party providers, in order to focus on their core operations.
“Some MNO operators are concerned about losing strategic control and revenues when ownership of infrastructure is transfered to the towercos,” Frost & Sullivan Industry Analyst Lehlohonolo Mokenela says.
According to Mokenela, “to mitigate this, towercos should develop strong partnerships with MNOs in sale and leaseback deals, and invest in building a strong reputation and track record in infrastructure management.”
“Sub-Saharan Africa Mobile Telecom Infrastructure Market, Forecast to 2021” by Frost & Sullivan estimates that the market for tower services in the region was worth $991.7 million in 2016, and is expected to grow at a compounded annual growth rate (CAGR) of 8.8% over the period 2016-2021, to reach $1,508.4 million by 2021.
The study provides an analysis of the telecoms tower industry in SSA, highlighting trends in some of the leading markets in the region; including Nigeria, South Africa, Kenya, Ghana and Tanzania.
“There are also a growing number of tower innovations that are expected to shape the evolution of the industry in the long-term,” Mokenela adds.
“This includes the structure of infrastructure outsourcing deals, supporting energy systems, base station technologies and infrastructure maintenance solutions.”
Given the region’s under-developed 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 towercos can look to either partner with, or acquire, specialist energy technology providers to accelerate their capabilities in this space.
“Despite the growing demand for wireless connectivity, particularly in remote areas, the business case for infrastructure investment is not always compelling,” explains Mokenela. “The success of towercos in the industry is a function of their tenancy ratios, which in SSA, has been relatively low by global standards. To accelerate market growth, towercos will need to convince MNOs, particularly the larger ones, of the reduced total cost of ownership of either outsourcing or selling off their infrastructure.”