The next big business in Africa: Renting out telecoms towers

Location, location, location.
Location, location, location.
Image: Helios Towers
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A firm called Helios Towers is the latest owner of telecoms towers in sub-Saharan Africa planning to go public. Helios is looking to raise over $2 billion on the London and Johannesburg stock exchanges for the 6,500-plus towers that it operates in four African markets. It joins fellow tower firms Eaton and IHS in tapping the public markets this year.

The business model of these tower companies, or towercos, in industry parlance, is to create a portfolio of properties in a region and then lease space on the towers to telco operators. Towercos in Africa, as the research firm Tower Xchange notes (pdf), tend to be “full service” outfits, offering power, maintenance, and other services, unlike their counterparts in mature markets like the US, which manage just the real estate aspects of the site, known as the “steel and grass” model.

For Helios, “full service” means it manages 1,200 drivers, security guards, and maintenance workers in Tanzania, Ghana, Democratic Republic of Congo, and Congo Brazzaville. Each site is on 10 square meters, surrounded by a palisade fence, a barrier designed to be climb-proof. Behind the fence is a generator, back-up batteries, and a lattice tower 40 to 50 meters tall, painted red and white so animals and aircraft don’t fly into it. Some sites in remote areas have 24-hour security, says Alex Leigh, Helios’ chief commercial officer.

Telco operators who rent the towers—each tower can have up to three tenants—send their own staff to install base stations. Everything else about the tower, from security to fuel for the generators, is handled by Helios and its outsourcing firm. Helios uses the “Lean Six Sigma” corporate management system to train its far-flung maintenance crew. “We tell them what their vans need to look like,” says Leigh.

Towercos like Helios will hope to profit from an increasing appetite for cellular coverage, even as telcos seek ways to curb their capital expenditure. The appearance of cellular towers are often a boon to the communities they serve, says Leigh. “The communities want them. That’s their access to Facebook, to mobile money, which is huge.”