Middle Eastern telecommunications companies are moving to sell off mobile-phone towers in a strategy that could raise as much as $20 billion.
Telecoms towers go up for sale
Middle Eastern telecommunications companies are moving to sell off mobile-phone towers in a strategy that could raise as much as US$20 billion (Dh73.46bn).
Regional operators typically own the mobile towers used to broadcast signals, but some are looking to sell off these assets. At least three regional operators are looking to outsource tower operations to reduce costs.
The majority of operators in the region had a poor financial performance this year, amid declining revenue per user and tough competition.
IHS, an African telecoms infrastructure company, says it is in talks with three Middle Eastern operators about buying their mobile towers.
"We will have a deal next year," said Issam Darwish, the chief executive of IHS. "We're talking to three, but one of them has decided to start the process in Africa."
IHS buys towers from telecoms companies and leases transmission capacity on them to multiple operators.
The model of tower-sharing is the norm in markets such as the US, India and some parts of Europe.
IHS manages 4,000 towers in Nigeria, Ghana and Sudan. It owns 900 towers outright in Nigeria, where the company is based.
Mr Darwish declined to specify which operators were looking to sell their mobile towers. However, it is believed they are companies with a presence in Saudi Arabia, Jordan and Bahrain.
The total value of mobile-phone towers in the Middle East is as high as $20bn, Mr Darwish said.
"I would roughly put the number of towers in the Middle East at 50,000 to 70,000 towers," he said. Previously, few regional operators have agreed to share mobile-phone masts. But this is the first time an independent third party has stepped in to manage the masts, Mr Darwish said.
According to the Financial Times, Etisalat is looking to sell towers in a number of countries in which it operates. Etisalat did not respond to a request for comment.
The average revenue per user (arpu) of Arab mobile operators has been steadily declining over recent years.
In the Emirates, the arpu of mobile users was $34 a month in 2009, declining to an estimated $30 a month this year, according to the Arab Advisors Group.
Mr Darwish said tower-sharing was a way of reducing costs.
"You can save up to 40 to 50 per cent eventually on your running costs. And that's something that you definitely need if you are operating in a competitive environment, as arpus are declining," he said.
Jawad Abbassi, the founder and general manager of Arab Advisors Group, said tower sharing was common in some other markets.
"This has been successfully done in Africa and India. It's not far-fetched. But this will only work if the operators agree to it," said Mr Abbassi. "There has to be some cost savings and efficiencies involved for them. Operators outsource rather than having redundant power generation, AC equipment and so on. It's a way for the operators to serve low-arpu markets cost-effectively. They cut some of their costs by sharing some of the costs of the towers."
IHS recently said it had approached investment groups to raise $200 million, which it wants to use to double the size of its business in western Africa.
"We've finalised expansion plans into further African countries. We've got our board approval to expand into Ivory Coast, Kenya, Rwanda, Uganda and Côte d'Ivoire," said Mr Darwish.
The company has also secured financing for next year, he said. "Citi now is raising up to $500m for us for next year, to be used to acquire towers in Africa and the Middle East," he said.
IHS is listed on the Nigerian Stock Exchange and reported turnover of $114m last year.